Circle (CRCL), the stablecoin issuer behind USDC, got a second upgrade by Wall Street analysts in a week, and this time by its biggest bear.

Compass Point’s Ed Engel, who had a sell rating and the lowest price target among analysts, has upgraded the stock to Neutral just a day after Mizuho’s Dan Dolev revised his bearish outlook.

However, Engel’s kept his price target the lowest among Wall Street analysts covering the stock, despite the upgrade. His new price target is $60, down from $75 due to premium valuation (more on that later).

The stock fell 7.3% during regular trading hours on Thursday to $67.55, but rose about 1% in post-market trading.

His upgrade reflects a changing narrative around the stock, which Engel now says trades more like a proxy for crypto markets than a standalone fintech.

Engel downgraded the stock to sell in July, citing increased competition for stablecoin. However, many of his concerns have been priced in by the market, he added.

The analyst also said that the stock could benefit if the long-debated CLARITY Act passes in 2026, which Engel sees as a 60% probability.

The legislation could provide clearer regulatory ground for stablecoins, potentially supporting growth in the USDC supply. Separately, increased tokenization of U.S. stocks and ETFs in DeFi markets — even without regulatory approval — may also reduce Circle’s dependence on broader crypto sentiment.

Cyclical nature

To Engel, Circle is now trading like a cyclical stock, which matters for the stock’s investment thesis.

Since the market dip in October, the digital dollar USDC has been moving in “lockstep” with ether ETH$2,803.58, with a correlation of 0.66. According to the analyst, this trend is likely to stay through mid-2026. The reason? Over 75% of all USDC is currently being used in high-risk crypto trading or lending apps.

This means that, despite being a “stablecoin,” USDC is still heavily tied to the wild ups and downs of the broader crypto market, making Circle more of a cyclical stock.

And this is still a problem, as he thinks the stock is trading at a premium valuation given the company’s exposure to a cyclical asset class — one of the reasons his price target remains the lowest among analysts.

Competition heating up

Engel noted additional risks for the stock.

USDC supply is down 9% since December, and emerging stablecoins like USDH, CASH, and PYUSD are taking market share, particularly on platforms like Solana SOL$123.64 and Hyperliquid HYPE$32.78. Engel also flagged that the firm could guide 2026 operating expenses above Wall Street forecasts, as many of its ongoing investments are unlikely to generate meaningful revenue in the near term.

Competition is also heating up from traditional financial players. JPMorgan, State Street, and BNY Mellon are moving forward with “deposit coins” that could directly compete with USDC in developed markets.

While Engel sees some upside if crypto markets rebound or regulation improves, the note concludes that Circle’s revenue remains tightly linked to speculative activity — and that a true decoupling from crypto cycles could still be years away.