Circle shares sink 16% after Open USD reveal, analysts say fears are 'overblown'

Circle shares fell more than 16% on Tuesday after Open Standard announced Open USD, a new stablecoin backed by more than 140 companies including Visa, Stripe, Mastercard, BlackRock and Coinbase, as investors weighed the potential competitive threat to USDC.

Analysts at William Blair said the sell-off was an overreaction, arguing that Circle's first-mover advantage, liquidity and payments infrastructure leave it well positioned despite a high-profile rival like OUSD.

Circle (CRCL) stock price chart. Source: The Block/TradingView

In a research note, William Blair reiterated its Outperform rating on Circle and said investors should view the rout as an opportunity to buy. The firm argued that competition in the stablecoin market is "inevitable" and ultimately validates the sector's potential.

"We see competitive concerns as overblown," analysts Andrew Jeffrey and Adib Choudhury wrote, pointing to USDC's roughly $74 billion market capitalization, deep liquidity and Circle Payments Network, the company's stablecoin payments infrastructure. New entrants will struggle to replicate Circle's model, they argued.