U.S. investment bank Compass Point has downgraded Circle (CRCL) from 'neutral' to a 'sell' rating, slashing its price target to $130—a 34% drop from Tuesday's closing price of $198.31. The downgrade follows President Trump's July 18 signing of the GENIUS Act, America's first major stablecoin legislation.
Analysts cited three primary catalysts: intensifying competition from banks and fintechs like Charles Schwab, Citi, and JPMorgan entering the stablecoin space; impending Federal Reserve rate cuts reducing yield on Circle's reserve assets; and declining retail crypto participation suppressing stablecoin demand. Circle shares fell 8.23% on Tuesday and are down 34% from their June all-time high of $298.99.
While acknowledging USDC's pivotal role in crypto infrastructure, Compass Point warned that rivals' 'wider distribution networks' threaten Circle's market share. The firm also highlighted uncertainty around new revenue-sharing agreements as a risk factor.