Circle (CRCL), stablecoin issuer $USDCfollowing the second upgrade in a week by Wall Street analysts, this time by the biggest bears.
Compass Point’s Ed Engel had rated the stock a “sell” among analysts and had the lowest price target, but he upgraded the stock to “neutral” just one day after Mizuho’s Dan Dolev revised his bearish outlook.
However, despite the upgrade, Engels kept his price target at the lowest level among Wall Street analysts covering the stock. His new price target is $75 to $60, due to premium valuation (more on that later).
Shares fell 7.3% to $67.55 during regular trading Thursday, but were up about 1% in post-market trading.
His upgrade reflects a changing narrative around stocks, with Engel saying they now trade more like agents in the crypto market than independent fintechs.
Engel pulled back on the sale of the stock in July, citing increased competition for stablecoins. But he added that many of his concerns have been priced in by the market.
The analyst also said stocks could benefit if the long-discussed Clarity Act passes in 2026, which Engel puts at a 60% chance.
This law could provide a clearer regulatory basis for stablecoins, potentially supporting their growth. $USDC supply. Separately, even without regulatory approval, increased tokenization of US stocks and ETFs in DeFi markets could reduce the circle’s dependence on broader crypto sentiment.
cyclical nature
For Engel, Circle currently trades like a cyclical stock, which is important to the stock’s investment thesis.
Since the market crash in October, the digital dollar has $USDC Moving “in lockstep” with the aether Ethereum$2,810.96the correlation is 0.66. This trend is likely to continue until mid-2026, the analyst said. reason? More than 75% of the total $USDC Currently used in high-risk cryptocurrency trading or lending apps.
Although this is a “stablecoin”, $USDC remains highly tied to the wild ups and downs of the broader crypto market, making Circle a more cyclical stock.
And this remains a problem. He believes the stock trades at a premium valuation given the company’s exposure to cyclical asset classes. This is one reason why his price target remains one of the lowest among analysts.
Competition intensifies
Engel pointed to further risks to stocks.
$USDC Supply has declined by 9% since December, with emerging stablecoins such as USDH, CASH, and PYUSD gaining market share, especially on platforms such as Solana. sol$117.47 and hyper liquid hype$31.51. Engel also warned that the company could drive operating expenses higher than Wall Street forecasts in 2026, as many of its ongoing investments are unlikely to generate meaningful returns in the short term.
Competition with traditional financial companies is also intensifying. JPMorgan, State Street and BNY Mellon are developing “deposit coins” that could be direct competitors. $USDC In developed markets.
While Engel expects there may be some upside if the crypto market recovers or regulations improve, the note concludes that Circle’s revenues remain closely tied to speculative activity and a true decoupling from the crypto cycle could still be years away.
