Why Circle (CRCL) Remains a Crypto Roller Coaster Despite Analyst Upgrade

Circle (CRCL), the stablecoin issuer behind USDC, just got upgraded by Wall Street’s most skeptical voice—but don’t expect smooth sailing. Compass Point’s Ed Engel, who held the lowest price target among analysts, upgraded the stock from Sell to Neutral on March 23, calling the change a reflection of shifting market sentiment. Yet his new target of $60 remains the lowest on Wall Street, and his reasoning reveals why Circle will continue behaving like a crypto roller coaster: the company trades more as a market barometer than as a standalone fintech.

From Sell to Neutral—What Changed for Circle’s Biggest Bear?

Engel’s upgrade came just days after Mizuho analyst Dan Dolev revised his bearish outlook in late January, signaling that many of the concerns priced into Circle’s valuation have begun to ease. When Engel originally downgraded Circle to Sell in July 2025, he cited intense stablecoin competition as his main concern. But the market has already factored in much of this risk, the analyst now argues.

The stock itself has been volatile, falling 7.3% on March 23 to close at $67.55 before recovering about 1% in after-hours trading. This volatility reflects the core tension Engel identifies: despite being labeled a “stablecoin” issuer, Circle’s fortunes remain tightly bound to broader crypto market movements.

Engel also highlighted a potential tailwind: the CLARITY Act, which he estimates has a 60% probability of passing in 2026. This legislation could provide clearer regulatory ground for stablecoins and potentially unlock new growth in USDC adoption. Additionally, increased tokenization of U.S. stocks and ETFs in decentralized finance markets—even without formal regulatory blessing—could reduce Circle’s dependence on crypto sentiment shifts.

The 75% Problem—Why USDC Can’t Escape Crypto Cycles

Here’s the uncomfortable truth behind Circle’s roller coaster ride: over 75% of USDC supply is currently deployed in high-risk DeFi protocols and trading platforms. Since the October 2025 market correction, USDC has moved in near “lockstep” with Ether (ETH), exhibiting a correlation of 0.66 through mid-2026. In practical terms, this means USDC trades like a crypto asset despite its stablecoin label—and by extension, so does Circle’s stock.

At current market prices (BTC at $70.44K and ETH at $2.14K as of March 24, 2026), the crypto market remains fragile. The analyst views Circle as a cyclical play rather than a defensive fintech position, which has pricing implications. At its current valuation, Engel argues the stock trades at a premium that doesn’t reflect this cyclical reality, explaining why his price target remains the lowest among Wall Street analysts.

Stablecoin Wars Heating Up

Circle faces intensifying competitive pressure from multiple fronts. USDC supply has declined 9% since December 2025, with emerging stablecoins like USDH, CASH, and PayPal’s PYUSD (currently at $1.00) gaining traction, particularly on Solana (SOL, currently $90.16) and Hyperliquid (HYPE, at $37.54). These alternative platforms and coins are fragmenting the stablecoin market.

More troubling for Circle: traditional financial giants are entering the game. JPMorgan, State Street, and BNY Mellon are all launching “deposit coins” that could directly compete with USDC in developed markets. These bank-backed alternatives have the advantage of institutional trust and regulatory clarity—advantages that USDC doesn’t yet possess.

Engel also warned that Circle may guide 2026 operating expenses above Wall Street expectations, as many of the company’s ongoing investments are unlikely to generate meaningful near-term revenue. This operating leverage risk adds another layer of uncertainty to the investment thesis.

Where’s the Upside? Regulation and Tokenization

Despite the headwinds, Engel identified two potential game-changers. The first is regulatory clarity through the CLARITY Act, which could establish a more favorable environment for stablecoins and potentially accelerate USDC adoption. The second is the growing tokenization of traditional assets like U.S. stocks and ETFs on blockchain networks, which could create new use cases for USDC beyond speculative trading.

However, the analyst cautioned that Circle’s revenue will likely remain tightly coupled to speculative crypto activity for years to come. A true decoupling from broader crypto cycles—which would transform Circle from a cyclical to a defensive investment—could still be a multi-year journey. In the meantime, Circle’s roller coaster ride shows no signs of stopping, even with the upgrade to Neutral.