Circle stock drops 7% after rally, as Wall Street warns of stablecoin competition risk

From Yahoo Finance: 2025-06-24 10:53:00

Circle (CRCL) stock dropped 7% after a sharp rally, driven by optimism over stablecoin regulation and adoption. The issuer of USDC stablecoin (USDC-USD) is on track to end a three-day winning streak, more than doubling since the Senate passed the GENIUS Act. Analysts expect competition to increase post-legislation, impacting market share expectations.

Compass Point analyst Ed Engel predicts bullish momentum for CRCL due to stablecoin adoption. Engel warns that regulatory clarity may lead to increased competition, potentially reducing long-term market share expectations and pressuring CRCL shares by 2025. Engel and team initiated coverage with a Neural rating and $205 price target.

Circle’s revenue mainly comes from “reserve income” earned on assets backing USDC stablecoin, primarily short-term US Treasuries. The company also earns from blockchain integration services and fees for redeeming USDC for dollars. Distribution will be crucial for market share growth as more regulated companies launch their stablecoins.

Engel notes that Circle pays a significant portion of reserve revenue to distribution partners like Coinbase (COIN) and Binance. While ideal for capturing demand from crypto speculators, mainstream business partnerships are needed for market share growth in payments. Fintech firm Fiserv (FI) plans to launch a digital asset platform with a new stablecoin (FIUSD) by year-end, using infrastructure from issuers Paxos and Circle.

Seaport Research Partners analyst Jeff Cantwell praises CRCL’s inclusion as a leading partner of FI in developing its own stablecoin. Cantwell initiated coverage on Circle with a Buy rating and $235 price target last week. Shares have surged over 700% from their IPO price of $31 on June 5.



Read more at Yahoo Finance: Circle stock falls, snapping monster rally as Wall Street flags rising risk of stablecoin competition