Circle (CRCL), the stablecoin issuer behind USDC, has received a rating from Wall Street analysts for the second time in a week, this time with its biggest bear rating.
Compass Point’s Ed Engel has a sell rating and the lowest price target among analysts, raising his rating on the stock to neutral just one day after Mizuho’s Dan Dolev revised his bearish outlook.
However, despite raising his price target on the stock, Engel kept it the lowest among Wall Street analysts. His new price target was lowered to $60 from $75 due to the valuation premium (more on that later).
The stock fell 7.3% to $67.55 in regular trading Thursday, but rose about 1% in after-hours trading.
His upgrade reflects the changing narrative surrounding the stock, which Engel now says trades more like a proxy for the crypto market than a standalone fintech.
Engel downgraded the stock to sell in July, citing increased competition from stablecoins. However, he added that many of his concerns have been priced in by the market.
The analyst also said the stock could benefit if the long-debated Clarity Act is passed in 2026, a possibility Engel puts at 60%.
The legislation could provide a clearer regulatory basis for stablecoins, potentially supporting the growth of USDC supply. Additionally, the increased tokenization of U.S. stocks and ETFs in DeFi markets — even without regulatory approval — could reduce Circle’s reliance on broader crypto sentiment.
cyclical
To Engel, Circle now trades like a cyclical stock, which is important to the stock’s investment thesis.
Digital dollar USDC has been “in lockstep” with Ethereum since October’s market decline the correlation is 0.66. Analysts say this trend is likely to continue until mid-2026. What’s the reason? Currently, more than 75% of USDC is used in high-risk cryptocurrency trading or lending applications.
This means that, although USDC is a “stablecoin,” it is still highly correlated with wild swings in the broader cryptocurrency market, making Circle more of a cyclical stock.
That remains a concern as he believes the stock is valued at a premium given the company’s exposure to cyclical asset classes – one of the reasons his price target remains the lowest among analysts.
Competition is becoming increasingly fierce
Engel noted additional risks with the stock.
With USDC supply down 9% since December, emerging stablecoins such as USDH, CASH and PYUSD are taking market share, especially on platforms like Solana and super liquid . Engel also said the company’s 2026 operating expenses will likely be higher than Wall Street forecasts because many of its ongoing investments are unlikely to generate meaningful revenue in the short term.
Competition among traditional financial companies is also intensifying. JPMorgan Chase, State Street, and BNY Mellon are pushing for “deposit coins” that could directly compete with USDC in developed markets.
While Engel believes there is some upside if the cryptocurrency market rebounds or regulation improves, the report concluded that Circle’s revenue remains closely tied to speculation and that true decoupling from the cryptocurrency cycle may be years away.