Compass Point’s Ed Engel upgraded Circle (CRCL) to Neutral from Sell and trimmed his price target to $60, arguing the stock now trades more as a proxy for crypto markets than as a standalone fintech. He noted that Circle’s performance is increasingly tied to Ether and the wider crypto cycle, pointing to more than 75% of USDC supply used in DeFi or on crypto exchanges, while the shares trade at a premium.
Engel previously downgraded Circle to Sell in July due to intensified competition for stablecoins. The upgrade comes as he says Circle could benefit if the CLARITY Act passes in 2026, which he sees as a 60% probability, potentially providing clearer regulatory ground for stablecoins and supporting USDC growth. Separately, tokenization of U.S. stocks and ETFs in DeFi markets—even without regulatory approval—could reduce Circle’s dependence on broader crypto sentiment.
He argues that Circle is now trading like a cyclical stock, a shift that matters for its investment thesis. Since October, USDC has moved in lockstep with Ether, with a correlation around 0.66, underscoring the ongoing link to crypto cycles. Engel also notes that over 75% of USDC is used in high-risk crypto trading or lending apps, implying that USDC remains tied to the volatile crypto market despite its stablecoin label.
USDC supply is down about 9% since December, with newer stablecoins such as USDH, CASH, and PYUSD gaining ground on Solana and Hyperliquid. Competition is intensifying from traditional finance as JPMorgan, State Street, and BNY Mellon pursue “deposit coins” that could directly compete with USDC in developed markets. While there may be upside if crypto markets recover or regulation improves, the note emphasizes Circle’s revenue remains closely linked to speculative activity, suggesting a true decoupling from crypto cycles could be years away.
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