- Circle stock price has retreated sharply in the past few days.
- It has formed a double-top and a bearish flag pattern.
- The growth of its top assets, like USDC and EURC, has stalled.
Circle stock price remained under pressure, and has slowly formed two risky chart patterns, pointing to further downside. CRCL was trading at $80 on Monday, down over 40% from its May high. Its market cap has dropped from $60.7 billion to $20 billion today.
Circle Stock Price Forms Bearish Chart Patterns
The daily chart shows that the Circle Internet share price has slumped over the past few days, moving from a high of $136 in May to the current $ 80.20. It has formed two major risk-based chart patterns: a double top and a bearish flag.
It formed a double-top point at $135.70 and a neckline at $84.37, its lowest level on April 9. That is a highly risky pattern that often leads to a major bearish breakout. A profit target is estimated by calculating the height as the difference between the double-top level and the neckline. In this case, the height is $51. Subtracting this figure from the neckline gives a target of $30.
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The stock has also formed a bearish flag pattern. This pattern normally forms after an asset slumps and then forms a horizontal channel. It also makes a bearish breakout over time.
The Circle Internet Group stock price has constantly remained below the 50-day moving average. If this happens, the next key target to watch will be the all-time low of $50.30. This outlook will become invalid if it jumps above the key resistance level of $100.
Circle Internet Group Faces Major Challenges
Circle Internet Group, the creator of the second-biggest player in the stablecoin industry, is facing major challenges this month. The most notable one is that the USDC, its main asset, has lost substantial value in the past few days. Its market cap dropped to $74 billion from the year-to-date high of $80 billion.
The same is happening with EURC, a stablecoin that is backed by the euro. Its market cap has dropped to $439 million, down from the year-to-date high of $467 million. Its 24-hour trading volume fell below the key $20 million support level. Similarly, the USYC, its tokenized money market fund, has stalled at $3.2 billion.
Stalled asset growth is a sign that its revenue growth will remain under pressure over the next few months. That’s because the company makes money by investing its assets in short-term government bonds.
On the positive side, the hawkish Federal Reserve interest rate decision pushed short-term bond yields to their highest level in over a year. What is unclear is whether rising yields will help offset the decline in assets under management on its platform.
Circle also faces some major risks ahead. One of them is that the upcoming Arc blockchain may struggle to gain traction, as we have seen with other similar networks. Plasma, which is a similar chain, has seen its total value locked (TVL) drop to $780 million from a high of $6.8 billion last year. Other top chains, including Kraken’s Ink, have also shed substantial assets in this period.
Additionally, analysts predict that the company’s growth will remain under pressure this year. The average estimate is that its revenue will grow by just 12% this year to $3.07 billion.
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