Circle (CRCL), the stablecoin issuer behind USDC, earned a second upgrade from Wall Street analysts in a week, and this time from its biggest bear.
Compass Point’s Ed Engel, who had a sell rating and the lowest price target among analysts, raised the stock to Neutral just a day after Mizuho’s Dan Dolev revised his bearish outlook.
However, Engel’s kept its price target as the lowest among Wall Street analysts covering the stock, despite the upgrade. Their new price target is $60, up from $75 due to premium valuation (more on this later).
The stock fell 7.3% during regular trading hours Thursday to $67.55, but rose about 1% in aftermarket trading.
Its improvement reflects a changing narrative around the stock, which Engel said is now being marketed more as a substitute for crypto markets than as a standalone fintech.
Engel downgraded the stock to sell in July, citing increased competition for stablecoins. However, the market has taken into account many of their concerns, he added.
The analyst also said the stock could benefit if the much-debated CLARITY Act passes in 2026, which Engel sees as a 60% chance.
The legislation could provide clearer regulatory ground for stablecoins, which could support USDC supply growth. Furthermore, further tokenization of US stocks and ETFs in DeFi markets (even without regulatory approval) may also reduce Circle’s dependence on broader crypto sentiment.
Cyclical nature
For Engel, Circle now trades as a cyclical stock, which is important to the stock’s investment thesis.
Since the market crash in October, the digital dollar USDC has been moving “at the same pace” as ether. with a correlation of 0.66. According to the analyst, this trend is likely to continue until mid-2026. The reason? More than 75% of all USDC is currently used in high-risk cryptocurrency trading or lending applications.
This means that despite being a “stablecoin,” USDC is still strongly tied to the ups and downs of the broader crypto market, making Circle a more cyclical stock.
And this remains an issue, as he believes the stock is trading at a premium valuation given the company’s exposure to a cyclical asset class, one of the reasons his price target remains the lowest among analysts.
The competition heats up
Engel flagged additional risks to the stock.
USDC supply is down 9% since December, and emerging stablecoins like USDH, CASH, and PYUSD are gaining market share, particularly on platforms like Solana. and hyperliquid . Engel also noted that the company could guide 2026 operating expenses above Wall Street forecasts, as many of its ongoing investments are unlikely to generate significant revenue in the near term.
Competition is also increasing from traditional financial players. JPMorgan, State Street and BNY Mellon are moving forward with “deposit coins” that could compete directly with USDC in developed markets.
While Engel sees some advantages if crypto markets recover or regulation improves, the note concludes that Circle’s revenue remains closely tied to speculative activity, and that a true decoupling from crypto cycles is still years away.
