Stablecoins have been all the rage in the financial markets ever since President Trump signed the “GENIUS Act” into law – and yet Circle Internet Group Inc (NYSE: CRCL) has lost nearly 20% since July 18th.
Experts believe the aforementioned crypto legislation is largely positive for the crypto market as it essentially invites stablecoins into the mainstream finance.
However, Ed Engle – a senior Compass Point analyst has a contrarian view on Circle stock. In his latest research note, the market expert argued GENIUS Act could actually prove a headwind for the company behind USDC.
Circle stock could crash all the way back to $130
Engle downgraded CRCL shares this morning to “sell” and lowered his price target significantly to $130 only, indicating potential for another 35% downside from current levels.
According to the Compass Point analyst, crypto investors have a habit of “selling the news” – and so, Cricle stock could pare back some of its recent gains after the GENIUS Act was signed into law.
In his research note, Ed Engle also recommended that investors remain “cautious toward the firm’s long-term economics that its $53 billion valuation implies.”
Despite recent losses, Circle shares are currently going for more than 6x their initial public offering (IPO) price.
Why is GENIUS Act a headwind for CRCL shares?
Compass Point sees the GENIUS Act as a near-term headwind for CRCL stock also because it will likely see mainstream financial technology names and banks to launch their own stablecoins.
This will essentially mount competitive pressures for the NYSE listed firm in the second half of 2025.
“These 2H25 catalysts could force investors to recalibrate long-term EBITDA margin and market share expectations while putting pressure on CRCL’s premium valuation,” the investment firm told clients.
Meanwhile, Circle shares do not currently pay a dividend either to appear any more appealing for those interested in setting up a new source of passive income for the long term.
Is it worth buying Circle on the recent pullback?
Ed Engle recommends that investors tread with caution in Circle stock since “USDC is already integrated with 24 different blockchains – and there are only so many chain that can afford these integration fees.”
Therefore, this income stream, he warned, could decelerate significantly in 2026 and beyond.
Investors should also note that CRCL shares are currently going for a price-to-sales (P/S) multiple of more than 25, which looks rather stretched given the crypto firm is only in the early innings of profitability at the time of writing.
The aforementioned challenges are not entirely lost on the rest of the Wall Street analysts either.
According to Barchart, while the consensus rating on the crypto stock remains at “moderate buy”, the mean target of about $187 indicates potential for another 7% downside from current levels.
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