Compass Point analyst Ed Engel has upgraded his rating on Circle (CRCL) to Neutral from Sell, acknowledging its shift toward behaving like a crypto market proxy. Despite the upgrade, Engel maintains a low price target of $60, citing ongoing valuation concerns and competition. The move follows a similar revision by Mizuho's Dan Dolev and comes as USDC's supply has declined.
Circle, the issuer of the USDC stablecoin, received an upgrade from one of its harshest critics on Wall Street. Ed Engel of Compass Point shifted his rating on CRCL to Neutral from Sell, while lowering his price target to $60 from $75. This adjustment reflects a recognition that the stock now functions more as an indicator of cryptocurrency market trends than as an independent fintech entity.
Engel, who initiated a Sell rating in July due to intensifying stablecoin competition, noted that many of those risks appear already reflected in the current share price. The stock dropped 7.3% during Thursday's regular trading session to $67.55 but recovered slightly by 1% in after-hours. This upgrade arrived just one day after Mizuho analyst Dan Dolev softened his bearish stance on the company.
A key factor in Engel's reassessment is Circle's deepening links to the crypto ecosystem. Since an October market dip, USDC has moved in lockstep with ether, showing a correlation of 0.66, a pattern expected to persist through mid-2026. Over 75% of USDC's supply is utilized in DeFi applications or on exchanges, tying the stablecoin—and thus Circle's fortunes—to volatile crypto trading and lending activities.
Potential positives include the proposed CLARITY Act, which Engel estimates has a 60% chance of passing in 2026 and could clarify regulations for stablecoins, boosting USDC adoption. Tokenization of U.S. stocks and ETFs in DeFi might also lessen reliance on pure crypto sentiment. However, challenges abound: USDC supply has fallen 9% since December, eroded by rivals like USDH, CASH, and PYUSD on networks such as Solana and Hyperliquid. Traditional banks including JPMorgan, State Street, and BNY Mellon are advancing "deposit coins" that could encroach on USDC's territory in mature markets.
Engel warns that Circle's revenue will likely remain intertwined with speculative crypto dynamics for years, justifying his cautious price target as the lowest among peers. While a crypto rebound or regulatory progress could lift the stock, its cyclical exposure keeps it on a roller coaster.
