Circle shares have fallen 76% from their all-time high and now sit 24% below their first-day IPO closing price, prompting the obvious question of whether the stock has become cheap enough for long-term investors to step in. On January 20, we flagged the shares as cheap and set up for a potential short-covering rally. That call played out, the stock rallied 80%, at which point we advised taking profit.

Our broader framework had been: cheap below $80, expensive above $125. But when the price dropped back to $80 more recently, we did not repeat the buy call, since the fundamentals had meaningfully deteriorated in the interim.

There have been several important developments that directly impact Circle's business prospects, some of which threaten the company's survival outright. The report below highlights what investors should be focusing on now, and which factors matter most.

There's a bullish case too, but first we need to look down, and gauge just how deep this could go. We explain below.

Circle (LHS) vs. USDC active addresses (RHS) - activity slowed down