Shares of stablecoin issuer Circle Internet Group fell sharply on Thursday following a Wall Street downgrade and reports related to a legal investigation related to recent cryptocurrency exploits.
Circle stock ended near session lows in Nasdaq trading, down 9.9% to $85.10.
Reflecting the continued volatility since Circle’s high-profile public debut last year, the drop extends the decline in the company’s stock, which has fallen nearly 24% in the past month and about 43% in the past six months.
However, this decline may also reflect a rebound in profit-taking after Circle shares soared from February to March, mainly due to the increased adoption of stablecoins.
Still, some analysts are urging caution. On Thursday, Compass Point lowered its rating on Circle from “neutral” to “sell” and set a price target of $77, implying a downside of about 9% from current levels.
Circle also faces pressure from regulatory uncertainty in the United States. While progress on the market structure bill stalls, banking industry groups continue to lobby against high-yielding stablecoins.
Bernstein analysts said concerns are overstated, noting that Circle’s underlying business remains unaffected and expected to grow. $USDC ($USDC) Recruitment and strong reserve income.
Related: Cryptocurrency investor sentiment will increase if CLARITY Act passes: Bessent
Fallout from Drift Protocol exploit continues to weigh on crypto markets
Separately, recent legal scrutiny related to abuse of the decentralized exchange Drift Protocol has added further uncertainty to the broader crypto market, indirectly weighing on sentiment towards Circle.
Investors affected by the $280 million drift exploit are urged to contact Oakland, California law firm Gibbs Mura about possible financial recovery, according to a notice distributed this week. The outreach signals the early stages of an investigation into a potential class action lawsuit related to losses from the incident.
Although Circle was not directly involved in this exploitation, the episode renewed concerns about counterparty risk and the stability of decentralized finance platforms, an overhang that could spill over into stocks linked to listed cryptocurrencies.
The Drift exploiter moved the stolen assets to: $USDCAlthough no action was taken, there was widespread speculation that the funds had been frozen by the Circle.
Related: Cryptocurrency hacks fall to $49 million in February as attackers shift to phishing scams
