By Nate Wolf

It isn't difficult to understand why a conflict in the Middle East would send energy and defense stocks higher. Circle Internet Group, though, was a more surprising winner.

The stablecoin stock surged 15% on Monday, outpacing the world's largest missile manufacturers and oil producers. It gave back some gains Tuesday, falling 4.9% to $91.42 in premarket trading, but investors may want to keep an eye on Circle if the U.S. and Israel's war with Iran drags on.

Mizuho Securities reiterated a Neutral rating on the stock and lifted its price target to $100 from $90 in a research note Tuesday. In an unstable world, the bull case for Circle is all about inflation and interest rates, Mizuho said.

Circle issues the dollar-pegged USDC stablecoin, which has a circulation of around $75.2 billion as of late February. The company earns the vast majority of its revenue from interest on USDC reserves, which it holds in short-term U.S. Treasuries, overnight reverse Treasury repurchase agreements, and bank deposits.

" Rising oil prices could drive up inflation, lowering the odds of rate cuts," Mizuho analyst Dan Dolev wrote. That means stable interest revenue at a time when shareholders are bracing for falling rates.

Brent crude futures rose to over $83 a barrel on Tuesday, up 17% over the last five days and 37% this year. And while the probability that the Federal Reserve holds the federal funds rate stable at its March and April meetings rose slightly, future targets have become more muddled.

Traders see a 12.7% chance the Fed doesn't cut rates at all in 2026, up from 5.8% just a week ago and 8.1% when Mizuho wrote its note, according to CME FedWatch. The probability of cuts totaling 50 basis points or more, meanwhile, dropped to roughly 55% from 72%.

Those shifts won't drastically change Mizuho's revenue estimates for Circle, but they probably juice the stock's multiple, the firm said.

Whether those probabilities are accurate -- especially with a new Fed Chair soon -- is a separate question. The answer may depend on the course of a still-fresh war and how higher oil prices impact the U.S. economy.

"The impact of higher oil prices on inflation or Fed policy is probably overdone," said Scott Helfstein, head of investment strategy at Global X. "Higher energy costs typically slow economic growth which ultimately reduces demand. The Fed may be more concerned about a slowing labor market than a transient energy-driven bump in inflation."

Write to Nate Wolf at nate.wolf@barrons.com

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March 03, 2026 09:43 ET (14:43 GMT)

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