Circle shares plunged on fears of intensifying stablecoin competition, but Wall Street has said the decline looks excessive.

On July 1 local time, blockchain media outlet Decrypt reported that USDC issuer Circle's stock, CRCL, fell as much as about 18% after news of OpenUSD's launch emerged.

The immediate backdrop to the market shock is OpenUSD, a new stablecoin slated to launch at the end of this year. OpenUSD has secured global partners including Coinbase, Visa and Mastercard, heightening wariness about Circle's existing business. ClearStreet, however, said investor reaction ran ahead of the actual level of threat.

ClearStreet said OpenUSD has partners on par with major stablecoins, but there is still no evidence it has proved meaningful traction. It said the selloff appeared excessive. It added that the narrative could continue to roil markets until OpenUSD launches, but Circle has maintained strong share even as new stablecoins keep emerging.

In particular, ClearStreet viewed OpenUSD as a case not very different from USDG. It cited USDG, Global Dollar Network's stablecoin, as not yet having secured meaningful market share. It said the position of an incumbent may not be shaken immediately by the announcement of a new stablecoin alone.

Circle CEO Jeremy Allaire (제러미 알레어) also issued a position on OpenUSD at investors' request and stressed the current scale of the USDC ecosystem. "Today, the USDC network is at an enormous scale, and OpenUSD will not have this foundation at the time of launch," Allaire said.

Allaire pointed to network effects as the core of competitiveness. He said a strong stablecoin network requires diverse services and applications, ample liquidity, and deep integration with the policy and regulatory environment. He added that investment sustained by Circle and its ecosystem of thousands of partners worldwide has led to the creation of what he called the world's most trusted and accessible digital dollar infrastructure.

USDC now has a market value of more than $73 billion, ranking second among stablecoins and fifth among all cryptocurrencies. The only stablecoin asset larger than USDC is USDT, with a market value of $184 billion. This is presented as evidence that Circle is still maintaining a large network despite the emergence of new competitors.

The stock also rebounded slightly. CRCL recovered about 3% after the plunge and traded around $64.55. Still, compared with the sharp surge shortly after listing last year, it has fallen more than 18% over the past six months and is down more than 75% from its 52-week high of $262.97.

Against this backdrop, ClearStreet set a 12-month target price for Circle at $157, about 140% above the trading price at the time. In the short term, expectations around OpenUSD's launch could increase volatility in Circle shares. But the market is increasingly likely to reassess the competitive landscape while confirming actual changes in market share and the pace of network expansion.

We’ve had lots of questions from our investor community looking for thoughts on OUSD, and so I thought I’d share my direct views here for anyone. Stablecoin networks are platform and network effect businesses that are established over a long period of time, tend towards…