- Circle stock may be at risk as the USDC market capitalization drops.
- US bond yields have continued falling amid the rising energy prices.
- On the positive side, CRCL stock has formed a cup-and-handle pattern.
Circle stock price has wavered in the past few weeks, even as the US equities market has surged to a record high. CRCL was trading at $113, down from the year-to-date high of $140. It may remain under pressure in the near future as US bond yields retreat and the USDC market cap stalls.
USDC Market Cap and US Bond Yields are Falling
To understand why the falling USDC market capitalization and bond yields are important, it is first crucial to understand how Circle Internet Financial generates revenue.
The company runs USDC, the second-biggest stablecoin in the world. Unlike Tether, which invests its USDT tokens in various assets, Circle is regulated by the GENIUS Act. This means that it is only required to invest its cash in short-term government bonds.
Therefore, the company thrives only when the USDC market capitalization is soaring, and bond yields are elevated. Data shows that the USDC market capitalization has dropped from the year-to-date high of $80 billion to $75 billion today. The amount has barely grown this quarter, a sign that its revenue will be affected.
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Meanwhile, after surging in May, US government bond yields have reversed in the past few weeks. This retreat happened as investors priced in a deal between the US and Iran, which has pushed crude oil prices lower.
Data show that Brent and the West Texas Intermediate (WTI) benchmarks have recently plunged below $100. As a result, inflation expectations have continued falling. The ten-year yield dropped to 4.46%, while the two-year has dropped to 4% from the year-to-date high of 4.18%.
These numbers mean that Circle’s revenue and profitability growth will remain under pressure. TokenTerminal data shows that Circle made $203 million in May, up slightly from the previous month. Wall Street analysts predict that the company’s annual revenue will come in at $3 billion this year, followed by $4.3 billion next year.
On the positive side, Circle’s USDC market cap will continue to grow over the next few years. For one, analysts believe that the total market cap of all coins will jump to over $4 trillion by 2030.
Another key driver is that agentic commerce will continue to grow. Data show that the number of monthly active agents jumped to 157,678, while all-time transfers rose to $52.6 million. USDC has the biggest market share in the agentic commerce industry.
Circle Stock Price Prediction: Technical Analysis
The daily chart shows that the CRCL stock price has dropped sharply in the past few weeks. It dropped from a high of $140 on May 12 to a low of $98.
It has formed a bullish engulfing pattern, a common reversal sign in technical analysis. A closer look shows that it has formed a cup-and-handle pattern, which often leads to more gains.
Therefore, while risks remain, there is a likelihood that the Circle share price will continue to rise, initially toward the upper side of the cup at $140. A move above that level will signal further gains, potentially reaching the psychological level of $200.
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