TLDR
- Compass Point analyst Ed Engel upgraded Circle (CRCL) from Sell to Neutral but lowered his price target from $75 to $60
- Over 75% of USDC supply is used in DeFi or exchanges, making Circle’s stock move in lockstep with crypto markets rather than as a standalone fintech
- USDC has shown a 0.66 correlation with ether since October’s market dip, with the trend expected to continue through mid-2026
- USDC supply dropped 9% since December as competitors like USDH, CASH, and PYUSD take market share on platforms like Solana and Hyperliquid
- Major banks including JPMorgan, State Street, and BNY Mellon are developing competing “deposit coins” that could challenge USDC in developed markets
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Circle just got its second analyst upgrade in a week. This time from its harshest critic.
Circle Internet Group, CRCL
Compass Point’s Ed Engel moved Circle from Sell to Neutral on Thursday. He previously held the lowest price target among all analysts covering the stock. But don’t celebrate just yet.
His new price target sits at $60. That’s down from his previous $75 target. The stock closed Thursday at $67.55, down 7.3% during regular trading hours. It ticked up about 1% in after-hours trading.
Engel originally slapped a sell rating on Circle back in July. His beef? Growing competition in the stablecoin space. Now he says the market has already priced in most of those concerns.
The upgrade comes just one day after Mizuho’s Dan Dolev also revised his bearish stance. Two bears backing off in rapid succession raises eyebrows.
Trading Like Crypto, Not Fintech
Here’s the kicker. Engel isn’t upgrading because Circle got better. He’s upgrading because the stock changed character entirely.
Circle now trades as a crypto proxy rather than a fintech company. That’s a fundamental shift in how investors should view the stock.
Since October’s market dip, USDC has moved in lockstep with ether. The correlation stands at 0.66. Engel expects this pattern to stick around through mid-2026.
Why such tight correlation? More than 75% of all USDC sits in high-risk crypto trading or lending applications. The “stable” in stablecoin doesn’t mean the business is stable.
Circle’s revenue remains tightly linked to speculative crypto activity. This makes Circle a cyclical stock whether management likes it or not.
Regulatory Hope and Mounting Pressure
Engel sees a 60% chance the CLARITY Act passes in 2026. The legislation would provide clearer regulatory rules for stablecoins. That could support USDC supply growth.
Increased tokenization of U.S. stocks and ETFs in DeFi markets might help too. Even without regulatory approval, this trend could reduce Circle’s dependence on broader crypto sentiment.
But the competitive landscape is getting crowded fast. USDC supply has dropped 9% since December. Emerging stablecoins are eating into market share.
USDH, CASH, and PYUSD are gaining traction. They’re particularly strong on platforms like Solana and Hyperliquid.
Traditional finance is circling too. JPMorgan, State Street, and BNY Mellon are all developing “deposit coins.” These bank-issued competitors could directly challenge USDC in developed markets.
Engel also flagged another risk. Circle could guide 2026 operating expenses above Wall Street forecasts. Many of the company’s ongoing investments won’t generate meaningful revenue in the near term.
Despite the premium valuation concerns, Engel acknowledges some upside potential. If crypto markets rebound or regulation improves, the stock could benefit. But a true decoupling from crypto cycles could still be years away.
The analyst’s price target remains the lowest among all Wall Street analysts covering Circle.
