Circle's Post-IPO 600% Rally Falters as Stock Dips 4.8% Post-GENIUS Act, Analysts Sound Alarm Over Risks

Circle’s stock, which surged nearly 600% following its June IPO, now faces growing skepticism from Wall Street as analysts warn the rally may be unsustainable. The digital asset firm, whose USDC stablecoin is a major player in the crypto ecosystem, has seen its valuation peak at $80 billion but has since fallen to $53.2 billion, with technical indicators and regulatory developments raising concerns about a prolonged correction.

The recent downturn began after President Donald Trump signed the GENIUS Act into law on July 18, a move long anticipated by the market and credited with fueling much of Circle’s explosive rise. However, the post-announcement sell-off has followed a classic “buy the rumor, sell the news” pattern. By late Friday, just hours after the bill’s enactment, Circle’s stock had plummeted 4.8% from an intraday high of $262.97 to as low as $213.33. The decline continued into Monday, with the stock closing at $216.10—a 3.4% drop on the session.

Compass Point analyst Ed Engle has been among the most vocal critics, downgrading the stock from “neutral” to “sell” and slashing his price target by 40%, from $205 to $130. Engle argues that the recent volatility reflects underlying structural challenges, including regulatory risks and a saturated stablecoin market. “While we expected CRCL to rally into stablecoin legislation, crypto investors typically ‘sell the news’ after highly anticipated events,” he stated, adding that the firm’s valuation remains “unreasonably high” for a company facing intensifying competition and regulatory scrutiny.

Engle also highlighted the limitations of Circle’s growth model. USDC is already integrated across 24 blockchains, but the analyst noted that many smaller chains may struggle to afford steep integration fees, likely capping future revenue from this stream. “We expect this income to normalize lower in 2026 and beyond,” he said, signaling a shift in the firm’s ability to sustain rapid expansion. Additionally, traditional fintechs and banks are expected to enter the stablecoin space later this year through white-label partnerships and acquisitions, further pressuring Circle’s market position.

Despite the GENIUS Act’s intended support for stablecoins, the market has not interpreted it as a clear win for Circle. The company, which had lobbied extensively for regulatory clarity, now faces the irony of tighter oversight and a more competitive landscape. Analysts point to Tether’s $161.7 billion market cap as a stark reminder that USDC remains a distant second in the stablecoin race. Meanwhile, technical indicators such as the relative strength index (RSI) and On-Balance Volume suggest weakening momentum, with buying interest appearing to wane.

Political dynamics also loom over the sector. A crypto-backed political action committee, Fairshake, disclosed $141 million in cash around the time of the GENIUS Act’s passage, signaling efforts to influence future regulatory outcomes ahead of the 2026 midterms. While the immediate impact of these efforts remains unclear, they underscore the sector’s ongoing struggle to balance innovation with oversight.

Circle’s trajectory serves as a case study in the volatile nature of crypto-related assets. What began as a speculative frenzy driven by retail investor enthusiasm and regulatory optimism has given way to a more cautious outlook. With rivals like Paxos emerging and regulatory frameworks evolving, the company’s ability to maintain its valuation will depend on navigating a rapidly shifting landscape. For now, Wall Street’s skepticism suggests the party may be ending for a stock that once seemed untouchable.