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.

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.

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The pair were also skeptical of Open Standard's pitch. The project harped that Open USD will share most of the earnings from its reserves with participating businesses when it hits the market later this year. But Jeffries and Choudhury argue that Circle already offers similar incentives to partners and that OUSD is "a solution searching for a problem."

The analysts also compared Open USD to past payments consortiums like MCX and Paze, saying they struggled "to gain traction against established networks."

Circle CEO speaks up

Circle CEO Jeremy Allaire struck a similar tone in a post on X shortly after the announcement, saying USDC remains "the most trusted, widely adopted, institutional-ready stablecoin in the world."

Allaire said Circle would continue investing in expanding its ecosystem across banks, payment companies, capital markets firms and enterprises while giving partners more ways to become "economic stakeholders" in the growth of the USDC network.

He added that the company welcomed continued innovation and competition and would keep building infrastructure for a "stablecoin-native internet financial system."

Paolo Ardoino, CEO of primary Circle rival Tether, struck a similar tone on social media Tuesday, saying "Welcome OUSD. Player 2 has entered the game."