Circle’s most prominent skeptic has now surrendered, yet cautions that the stock remains a turbulent ride in the cryptocurrency market.

Circle’s increasing correlation with ether and its involvement in DeFi is influencing the re-rating, despite concerns regarding valuation and competition.

Key Points:

• Ed Engel from Compass Point has upgraded Circle (CRCL) from Sell to Neutral and lowered his price target to $60, suggesting that the stock is increasingly viewed as a proxy for the crypto markets rather than as an independent fintech.
• Engel points out that CRCL’s performance is becoming more intertwined with ether and broader crypto market trends, with over 75% of USDC supply utilized in DeFi or on exchanges, and the stock continues to trade at a high premium.
• Potential factors such as the CLARITY Act and the tokenization of U.S. assets could foster USDC growth, but Circle is confronting rising competition from new stablecoins and bank-issued “deposit coins,” and its revenue may stay closely tied to speculative crypto activity for the foreseeable future.

Circle (CRCL), the stablecoin provider behind USDC, received a second upgrade from Wall Street analysts within a week, this time from its most significant skeptic.

Ed Engel from Compass Point, who previously held a sell rating and the lowest price target among analysts, has reassessed the stock to Neutral just one day after Mizuho’s Dan Dolev adjusted his bearish perspective.

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Nonetheless, Engel maintains the lowest price target among Wall Street analysts covering the stock, despite the upgrade. His updated price target is $60, decreased from $75 due to premium valuation (more on that later).

The stock dropped 7.3% during regular trading hours on Thursday to $67.55, but experienced a slight increase of about 1% in after-hours trading.

This upgrade indicates a shift in the narrative surrounding the stock, which Engel now describes as trading more like a proxy for crypto markets rather than an independent fintech.

Engel had downgraded the stock to sell in July, citing intensified competition in the stablecoin sector. However, he added that many of his concerns have already been factored into the market.

The analyst also expressed that the stock could see benefits if the long-discussed CLARITY Act is passed in 2026, which Engel estimates has a 60% likelihood.

This legislation could create clearer regulatory frameworks for stablecoins, potentially aiding in the growth of USDC supply. In addition, the increasing tokenization of U.S. equities and ETFs in DeFi markets — even in the absence of regulatory approval — might also decrease Circle’s reliance on overall crypto sentiment.

Cyclical Characteristics

For Engel, Circle is now behaving like a cyclical stock, which is significant for the stock’s investment narrative.

Since the market downturn in October, the digital dollar USDC has been moving “in sync” with ether ETH$2,698.36, with a correlation of 0.66. The analyst believes this trend is likely to persist through mid-2026. The reason? More than 75% of all USDC is currently being utilized in high-risk crypto trading or lending applications.

This indicates that, despite being a “stablecoin,” USDC remains closely linked to the volatile fluctuations of the wider crypto market, positioning Circle as more of a cyclical stock.

This situation is still problematic, as he perceives the stock to be trading at a premium valuation given the company’s exposure to a cyclical asset class — one of the reasons his price target stays the lowest among analysts.

Increasing Competition

Engel pointed out additional risks for the stock.

The supply of USDC has declined by 9% since December, with emerging stablecoins like USDH, CASH, and PYUSD capturing market share, especially on platforms such as Solana SOL$115.80 and Hyperliquid HYPE$29.96. Engel also indicated that the firm might project 2026 operating expenses to exceed Wall Street expectations, as many of its ongoing investments are unlikely to yield significant revenue soon.

Competition is intensifying from traditional financial institutions as well. JPMorgan, State Street, and BNY Mellon are advancing with “deposit coins” that could compete directly with USDC in established markets.

While Engel sees potential upside if crypto markets rebound or regulatory conditions improve, the conclusion indicates that Circle’s revenue remains tightly linked to speculative activities — and a genuine separation from crypto cycles could still be years away.