From Moon to Meh: Circle’s Wild Ride Meets Market Math

After a blistering rally, Circle's stock stumbles as Wall Street eyes looming threats from a new wave of stablecoin competition.

Editorial Team (ET)June 25, 2025

Circle’s recent winning streak just hit a wall. After tripling since its IPO earlier this month and riding the wave of optimism over new federal legislation, the stablecoin issuer’s stock plunged nearly 7% on Tuesday, pulling back sharply as analysts warned of rising competition in the digital token space. The rally was fast, the fall was faster.

The digital asset firm behind USDC, the second-largest stablecoin by circulation, had soared in recent days thanks to the momentum created by the GENIUS Act, a long-awaited regulatory framework for asset-backed digital tokens. When the U.S. Senate passed the bill last week, it was a clear green light for companies like Circle to scale up with legitimacy and new use cases. But while clarity is good, it's also a signal for rivals to enter the arena. That’s the double-edged sword of regulation—stability and oversight come at the cost of exclusivity.

Analyst Ed Engel from Compass Point put it plainly: regulatory clarity opens the floodgates. Engel downgraded expectations with a “Neural” rating on Circle and slapped a $205 price target on the stock, signaling a potential correction from its current $245 level. He sees the stock's bullish momentum continuing in the short term, but the longer-term outlook is cloudy as fresh players circle the market.

Despite the dip, Circle’s fundamentals remain tied to the performance of its USDC reserve system. The company earns the bulk of its income from interest on the short-term U.S. Treasury assets backing its stablecoin. As rates have stayed high, Circle has enjoyed a profitable yield on reserves, sharing nearly 60% of that income with partners like Coinbase and Binance to distribute USDC across various crypto exchanges. That strategy has been crucial, but some analysts argue it’s time for a broader approach.

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