Shares of stablecoin issuer Circle (CRCL) have risen over 20% this week, outperforming the broader market following Israeli and U.S. airstrikes on Iran over the weekend.

Japanese bank Mizuho attributed the rally in part to a sharp rise in oil prices, as tensions in the Middle East exploded. Higher crude prices could rekindle inflationary pressures, lowering expectations for Federal Reserve rate cuts.

That dynamic matters for Circle. The company earns the bulk of its revenue from interest income on the U.S. government debt it holds as reserves backing its USDC stablecoin. Higher interest rates translate into greater yield on those reserves, directly supporting revenue. Conversely, rate cuts compress that income stream.

Since U.S. and Israeli strikes on Iran over the weekend, WTI crude has climbed roughly 7%–8% on elevated geopolitical risk and supply disruption concerns.

Crypto markets were jolted at the outbreak of war in the Middle East on Saturday, with bitcoin BTC$68,681.06 sliding sharply in early trading amid a broader risk-off move, but prices have since stabilized.

Analysts Dan Dolev and Alexander Jenkins estimated that reduced expectations for rate cuts add about 1% to their Circle 2026 and 2027 revenue forecasts.

More importantly, the analysts pointed to a doubling in the “right tail risk" of a no-rate-cut scenario in 2026, according to Chicago Mercantile Exchange (CME) FedWatch data, a shift that could further support Circle’s valuation multiple.

A roughly 5% rise in bitcoin over the past 24 hours may also be contributing to positive sentiment. The largest cryptocurrency is currently trading around $68,100.

The bank raised its Circle price target to $100 from $90, while maintaining a neutral rating on the shares. The stock was trading 6% higher at $101.90 at publication time.

While higher-for-longer rates are a near-term positive, longer-term revenue growth could face pressure as stablecoins become increasingly commoditized, the report added.

Circle shares gained more than 45% last week in a violent short squeeze following fourth quarter earnings. That move snapped what had been a brutal 80% drawdown from record highs hit last year.

Read more: Circle's post-earnings surge nears 50% as short squeeze, not strong financials, fuels rally