Shares in Circle (CRCL) stock are falling during Tuesday’s trading sessions after some bearish updates from a top Wall Street analyst. Since its IPO in June, the stablecoin issuer’s stock has soared by 566%. Despite a successful first month and change, one analyst on Wall Street remains a bit bearish and skeptical about whether Circle’s boom is just face-hype.

Mizuho analysts have forecast the stock to drop to $85 in the coming months as stablecoin hype dies down. “We believe consensus does not fully account for looming interest rate cuts, and also overstates USDC’s medium-term growth potential,” Mizuho managing director Dan Dolev and his team said in a research note. The analysts added that Fed rate cuts could do more harm than good for CRCL, as yields on Treasurys would decline. Additionally, Dolev also flagged rising distribution costs, noting that Circle shares a significant portion of its reserve income with partners like Coinbase.

More Bearish Sentiment about Circle (CRCL) Stock

Furthermore, Mizuho analysts cite that the GENIUS Act could bring major competition for the Circle stablecoin. Should more entrants in the stablecoin space come in, Circle’s market share and current dominance could shrink, sending the stock back down to earth. Jeff Cantwell of Seaport Research Partners says “We think the overall stablecoin ‘market cap’ will reach $500B by the end of next year; longer-term, we think it ultimately can reach $2T.” Such growth, if Circle remains the dominant company in the market share, could end up keeping CRLC stock valuable.

Also Read: USDC Issuer Circle Applies for US National Trust Bank License

Numerous Wall Street analysts have concurred with Mizuho’s analysis of Circle stock, projecting it to eventually come crashing down. Analysts at Jeffries aren’t convinced that the Circle (CRCL) stock rally is more than a hype cycle. In a recent note, analyst Trevor Williams argued that U.S. consumers still prefer the current card-based system, which is fast, secure, and packed with perks. Others note Circle’s sky-high valuation, now trading near 180x earnings, and warn of risks tied to its thin 25% free float. RIA Advisors’ Michael Lebowitz also sees Circle’s role more like a money market proxy for crypto traders than a serious challenger to Visa or Mastercard.

Wall Street remains divided on the stock, with 8 Buy, 6 Hold, and 3 Sell ratings, according to Bloomberg data. CNN analysts surveyed on CRCL stock are also mixed, with 50% of analysts calling the stock a buy, 36% suggesting to hold, and the remaing 14% opting to sell CRCL.