Circle Stock Price Falls 6% on Morgan Stanley Downgrade, Clarity Act Uncertainty

Circle stock price dropped more than 5% in premarket on Monday after Morgan Stanley downgraded the stock and cut its price target sharply. The move coincided with ongoing investor concerns over the stalled Clarity Act in the Senate.

Morgan Stanley Gives Sell Rating to Circle Stock, Cuts Price Target

Morgan Stanley analyst James Faucette downgraded Circle Internet Group from ‘equalweight’ to ‘underweight’. The sell rating is aligned with recent forecasts by Wall Street analysts as they reevaluate trading volumes and revenue.

Morgan Stanley also cut the price target from $106 to $38. Notably, Mizuho and JPMorgan also cut their price targets on Circle stock.

“We downgrade Circle as USDC contraction exposes reserve income sensitivity and points to a lower-margin shift toward transaction revenue,” said the analyst. He added that tokenized money market funds and deposits threaten both USDC balances and take rates.

In addition, Morgan Stanley considered challenges from The Open USD (OUSD) stablecoin launched by a large consortium including Visa, Mastercard, BlackRock, and Coinbase. OUSD uses a shared-governance and reserve-economics model that risks further decrease in USDC supply.

Meanwhile, TD Cowen analyst Bryan Bergin initiated coverage of Circle stock with a ‘buy’ rating and $82 price target. He claimed the company is a rising infrastructure provider enabling the modernization of payments and financial markets through stablecoins.

Stock Falls amid Clarity Act Vote Uncertainty

CRCL stock price dropped more than 5% during premarket trading on Monday. Circle stock closed 2.54% lower at $62.61 on Friday, with an intraday low and high of $58.66 and $63.51, respectively. Trading volume was near the average volume of 15 million.

Circle stock has tumbled 9% last month amid renewed US-Iran war. However, Trump said US-Iran peace talks to begin today, claiming the Middle East countries requested to hold strikes amid diplomatic deals.

Meanwhile, the Clarity Act remains off the Senate floor schedule on Monday, with uncertainty over a cloture motion this week. Notably, a potential cloture motion by Senate Majority Leader John Thune on Wednesday would leave a narrow window for a procedural vote before the August recess.

As CoinGape reported earlier, Senator Thom Tillis and Ruben Gallego sent a new ethics package to White House on Thursday. Polymarket data show below 30% odds of the Clarity Act passing this year. However, Bernstein claimed a stalled Clarity Act could accelerate SEC and CFTC crypto rulemaking.

CRCL stock prediction revealed it needs to move above the 20-day EMA of $65 to confirm a bullish short-term outlook. Also, if Circle stock closes above $65, it could move to the next target at the 50-day EMA of $75.

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