Circle (CRCL), the company behind the USDC stablecoin, watched its shares tumble 18% on Tuesday after word spread of a rival stablecoin called Open USD, backed by heavyweight partners including Coinbase, Visa, and Mastercard, with names such as BlackRock also lined up behind it. But analysts at Clear Street argue investors hit the panic button far too hard.
Why analysts call the drop overblown
In a note published Wednesday, Clear Street said the sell-off does not match the actual risk. "While OUSD has strong partners similar to other leading stablecoins, without any solid evidence that OUSD can get real traction, the selloff looks overdone," the analysts wrote.
OUSD is slated to launch later this year, and the team concedes the competitive story could hang over CRCL for a while. Even so, they point out that USDC has repeatedly held its ground as fresh stablecoins have entered the market.
"While the narrative will linger, CRCL has maintained strong market shares even though new stablecoins continuously arise," they wrote. "Our initial assessment is OUSD is not dissimilar to USDG (Global Dollar Network stablecoin) which hasn't gained meaningful market shares."
Circle's CEO pushes back
Responding to investor questions, Circle CEO Jeremy Allaire offered his own read on the OUSD launch, leaning on the "massive scale" USDC already commands, something a brand-new network cannot match on day one.
According to Allaire, a stablecoin network only becomes durable when it pairs a broad set of services and applications with deep liquidity and a "deep integration with the policy and regulatory environment."
"All of these investments by Circle and our global ecosystem of thousands of partners have delivered the net result of providing the world's most trusted and available digital dollar infrastructure," he wrote on X, stressing that the company does "not intend to slow down."
Where USDC stands
For now, USDC remains the second-largest stablecoin and the fifth-largest crypto token overall, carrying a market cap north of $73 billion. The only stablecoin ahead of it is Tether's USDT, which sits at a $184 billion market cap.
The stock's rough stretch
CRCL clawed back some ground on Wednesday, rising 3 to trade around $64.55. Still, the stock, which soared after its public debut last year, has slid more than 18% over the past six months and now trades more than 75% below its 52-week high of $262.97.
Clear Street, meanwhile, set a 12-month price target of $157 on the company in its Wednesday note, implying roughly a 140% jump from where the shares changed hands that day.
