Circle (CRCL), the stablecoin issuer behind USDC, earned a second upgrade by Wall Street analysts in a week, and this time by its biggest bearish.
Compass Point’s Ed Engel, who had a sell rating and the lowest price target among analysts, upgraded the stock to neutral just a day after Mizuho’s Dan Dolev revised his outlook bearish.
However, Engel’s maintained its lowest price target among Wall Street analysts covering the stock, despite the upside. His new price target is $60, up from $75 due to premium valuation (more on that later).
The stock fell 7.3% during regular trading hours Thursday to $67.55, but was up about 1% in after-hours trading.
Its upgrade reflects a changing narrative around the stock, which Engel says now trades more as a proxy for crypto markets than a standalone fintech.
Engel downgraded the stock to sell in July, citing increased competition for the stablecoin. However, many of his concerns have been priced in by the market, he added.
The analyst also said the stock could benefit from the passage of the long-debated CLARITY Act in 2026, which Engel sees as a 60% chance.
The legislation could provide a clearer regulatory framework for stablecoins, potentially supporting the growth of USDC supply. Separately, increased tokenization of US stocks and ETFs in DeFi markets – even without regulatory approval – could also reduce Circle’s reliance on broader crypto sentiment.
Cyclical character
To 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 in lockstep with ether. with a correlation of 0.66. According to the analyst, this trend is expected 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 “stable coin,” USDC is still heavily tied to the ups and downs of the broader crypto market, making Circle more of a cyclical stock.
And that remains a problem because he believes the stock is trading at a premium valuation given the company’s exposure to a cyclical asset class — one reason his price target remains the lowest among analysts.
Competition is intensifying
Engel pointed to additional risks for the stock.
USDC supply is down 9% since December and emerging stablecoins like USDH, CASH, and PYUSD are taking market share, especially on platforms like Solana. and Hyperliquid . Engel also signaled that the company could guide its 2026 operating expenses above Wall Street forecasts because many of its ongoing investments are unlikely to generate significant revenue in the near term.
Competition is also intensifying from traditional financial players. JPMorgan, State Street and BNY Mellon are moving forward with “custody coins” that could compete directly with USDC in developed markets.
Although Engel sees upside if crypto markets rebound or regulation improves, the note concludes that Circle’s revenue remains closely tied to speculative activity – and that true decoupling of crypto cycles could still take years.
