Circle ( CRCL ), the stablecoin issuer behind the USDC, got another upgrade by Wall Street analysts in a week, and this time by its biggest bear.
Compass Point’s Ed Engel, who had a sell rating and the lowest price target among analysts, has upgraded the stock to Neutral just a day after Mizuho’s Dan Dolev revised his bearish outlook.
However, Engel’s kept its price target the lowest among Wall Street analysts covering the stock, despite the upgrade. His new price target is $60, down from $75 due to premium appreciation (more on that later).
The stock fell 7.3% in regular trading Thursday to $67.55, but rose about 1% in post-market trading.
His upgrade reflects a changing narrative around the stock, which Engel says now trades more as a proxy for crypto markets than a stand-alone fintech.
Engel downgraded the stock to sell in July, citing increased competition for the stablecoin. But many of his concerns have been priced in by the market, he added.
The analyst also said the stock could benefit if the long-debated CLARITY Act passes in 2026, which Engel sees as a 60% probability.
The legislation could provide a clearer regulatory basis 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.
Cyclic nature
For Engel, Circle now trades as a cyclical share, which has implications for the share’s investment thesis.
Since the market plunge in October, the digital dollar USDC has moved in “lock-step” with ether with a correlation of 0.66. According to the analyst, this trend is likely to continue until mid-2026. The reason? Over 75% of all USDC are currently being used in high-risk crypto trading or lending apps.
This means that despite being a “stablecoin”, USDC is still heavily tied to the wild ups and downs of the broader crypto market, making Circle more of a cyclical stock.
And this remains an issue, as he believes the stock trades at a premium given the company’s exposure to a cyclical asset class — one of the reasons his price target remains the lowest among analysts.
The competition is heating up
Engel noted additional risks for the stock.
USDC supply is down 9% since December and new stablecoins like USDH, CASH and PYUSD are gaining market share, especially on platforms like Solana and Hyperliquid . Engel also said the firm could guide 2026 operating expenses above Wall Street forecasts, as many of its ongoing investments are unlikely to generate meaningful earnings in the near term.
Competition is also intensifying from traditional financial players. JPMorgan, State Street and BNY Mellon are moving forward with “deposit coins” that can directly compete with USDC in developed markets.
While Engel sees some upside if crypto markets rebound or regulation improves, the note concludes that Circle’s revenue remains closely tied to speculative activity — and that a true decoupling from crypto cycles could still be years away.
