Morgan Stanley slashed its price target on Circle from $106 to $38, citing shrinking USDC supply and intensifying competition from tokenized money market funds. Circle Internet took a beating on Monday after Morgan Stanley downgraded the stablecoin issuer to underweight from equal-weight, cutting its price target from $106 to a strikingly low $38. The bank cut its USDC supply forecasts by roughly 33% for 2027 and 44% for 2028. Reserve income is highly sensitive to both the size of USDC supply and prevailing interest rates. What this means for investorsThe projected contraction in USDC supply is particularly worth watching.