Crypto stock outlooks fluctuate after GENIUS, ahead of Q2 reports
While Compass Point analysts downgrade its Circle price target, Jefferies initiates Galaxy coverage with ‘buy’ rating
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Given the recent GENIUS Act signing and certain firms soon reporting Q2 earnings, it’s as good a time as any for a crypto stock update.
After the stablecoin-focused bill became law, Compass Point analysts downgraded Circle stock from neutral to sell.
Their CRCL price target declined from $205 to $130, according to a Monday note.
Analysts Ed Engel and Abdullah Dilawar anticipated the rally leading up to the GENIUS Act signing, but predicted the “sell-the-news” drop that came. Shares of CRCL were trading around $195 at 1:30 p.m. ET — down 14% in the last five days.
Competing stablecoins products from traditional banks and fintechs will also put pressure on CRCL’s premium valuation, they argued.
While CRCL’s $53 billion market cap (when the note was published) implied long-term expectations of ~25% market share and ~30% EBITDA margins, the $130 price target assumes 15% longer-term market share and 20% EBITDA margins.
Circle is set to report its second quarter earnings during an Aug. 12 webcast.
Moving on, Jefferies kicked off its coverage of Galaxy Digital on Tuesday with a buy rating and a $35 price target. I missed this while in court at the Roman Storm trial.
GLXY’s stock price was just above $30 at 1:30 p.m. ET — up about 12% this week.
Being a “comprehensive provider for institutions seeking digital asset exposure” gives Galaxy an edge over more specialized peers like prime brokerage FalconX, liquidity provider Cumberland, market maker Wintermute and bitcoin-focused firm NYDIG, Jefferies analysts argue.
The GENIUS Act could open up new stablecoin-related business opportunities (like custody or issuance partnerships), they added. The CLARITY Act would likely contribute to “incremental” revenue opps as institutional players enter the segment.
Beyond that, roughly two-thirds of Galaxy’s enterprise value stems from its data center business, according to Jefferies. The company bought Argo Blockchain’s Helios mining facility in 2022 and is hosting CoreWeave AI and HPC operations there.
We’ll be listening to what Mike Novogratz has to say during Galaxy’s Aug. 5 earnings call.
Before Circle and Galaxy report their earnings next month, Coinbase will share its Q2 results on July 31.
Compass Point analysts, in a July 16 note, increased their Coinbase price target from $195 to $330 (COIN shares traded for ~$395 this afternoon). But it reiterated its neutral rating, rather than opting for “buy.”
Headwinds for the crypto exchange include US trading activity moving toward US ETFs, CME futures and decentralized exchanges. Monthly data from competitors like Robinhood and Exodus affirms weak Q2 trends to that end.
Compass Point analysts estimate that Coinbase’s transaction revenue decreased 45% quarter over quarter.
“We’re hesitant toward shorting COIN during a crypto bull market and potential for Fed rate cuts — either from Powell or his successor,” Engel and Dilawar wrote. “However, if rate cuts and CLARITY act are postponed beyond 3Q25, this could pressure COIN’s valuation amid deteriorating fundamentals.”
Before you go enjoy your weekend (after reading the rest of this newsletter, of course), I’ll mention one other crypto-linked stock that just turned heads with its latest hire.
Nasdaq-listed SharpLink Gaming today named Joseph Chalom, BlackRock’s former head of digital asset strategy, as its co-CEO.
You might recognize the SharpLink name. It’s that Joe Lubin-led company that all of a sudden got really into Ethereum. It held 360,807 ETH, as of July 20. (For more on crypto treasury strategies, consider reading this).
Sharplink’s stock is up about 110% from a month ago, but has dropped roughly 30% in the last week. Crypto equities remain a segment we’ll be watching closely.
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