Circle fell 22% last week before recovering, as Ark Invest bought 161,000 shares and analysts maintained their buy recommendation with a price target of $152–$190.
Circle shares began to narrow their losses on Wednesday following a chain of events the previous day: the Clarity Act, a cryptocurrency market structure bill, included a provision banning stablecoin yields, while rival Tether announced plans for a full audit of an unnamed Big Four firm. As a result, the issuer 'USDC stock recorded a cumulative 22% decline for the week, before recovering to around $102.50 and briefly touching $110 shortly after Wednesday's market opened.
The controversial provision in the Clarity Act, the product of a compromise between the cryptocurrency industry and the community banking sector, would prohibit platforms like Coinbase from distributing deposit-like rewards to USDC holders. Tether 's audit announcement has raised concerns about the possibility of Circle 's biggest rival expanding its presence in the US market, where USDC relies on its legal compliance advantage as a core competitive weapon.
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However, analysts from Clear Street and Bernstein unanimously agreed that the market reaction had been excessive. The analysis team led by Owen Lau at Clear Street described the sell-off as “overkill,” maintaining their Buy recommendation and a price target of $152, arguing that the strategic thesis regarding the demand for USDC, including asset cryptography, AI-based payments, and managed payment infrastructure, remains intact.
Bernstein went further with a price target of $190 and an Over recommendation, emphasizing that the yield ban applies to distribution platforms, not to Circle itself as the issuer profiting from the reserve.
Cathie Wood of Ark Invest acted ahead of the analyst notes: through several ETFs, the firm bought 161,000 shares of Circle on Tuesday, equivalent to $16.5 million in Wednesday's prices, a move interpreted by the market as confirming the undervaluation view.
On Coinbase's side, although CEO Brian Armstrong argued that the paradoxical ban on stablecoin rewards actually benefits the exchange's profit margins because Coinbase currently passes most of its revenue from USDC reserves on to users, the exchange's stock still fell about 10% this week to $181. Bernstein expects Coinbase to adapt and transition to a new reward model during the upcoming transition period.
