Changes in Circle's Reserves Approaching the Crypto Market

Important Change in Circle Shares

Ed Engel, an analyst at Compass Point, upgraded Circle (CRCL) shares from a 'Sell' recommendation to 'Neutral' and revised the price target to $60. Engel emphasized that with this change, the stock is now trading more as a proxy for the cryptocurrency market.

Increasing Connection with Crypto Markets

In his analysis, Engel pointed out that the performance of CRCL shares has become increasingly correlated with Ethereum and overall cryptocurrency cycles, noting that over 75% of the total USD Coin (USDC) supply in USD terms has been used for decentralized finance (DeFi) or exchange transactions. He stated that the shares are still trading at a high premium.

Potential Growth Opportunities and Competition

Engel also added that potential catalysts such as the CLARITY Act and the tokenization of U.S. assets could support the growth of USDC. However, Circle is facing increasing competition from new stablecoins and bank-backed 'deposit currencies'. It is anticipated that its revenues could remain closely tied to speculative crypto activities for years to come.