Circle Internet stock has remained under pressure in the past few months as the company faces substantial headwinds. It ended last week at $82.22, down by 42% from its highest level this year. This weakness has coincided with the falling US bond yields, USDC supply, and the fading Arc momentum.
Circle Internet Group pressured as USDC supply falls
There are signs that the USDC demand is falling this month. CoinMarketCap data shows that the market cap of the stablecoin has slumped to $72.4 billion from $76 billion in September. It has dropped from the year-to-date high of $80 billion.
Circle Internet is affected by the ongoing USDC supply because of its business model, which revolves around its supply. The company invests most of its USDC reserves in short-term government bonds. It uses these investments to generate a return, which depends on yields.
Data shows that US bond yields have reversed in the past few days, even though analysts expect the upward trend to continue. The three-month yield has dropped to 4.17% from this month’s high of 4.2%. As such, these numbers mean that the company’s revenue will be modest.
Yahoo Finance data show that analysts expect Circle’s revenue growth will be relatively modest. The average estimate is that its third-quarter revenue will come in at $785 million, up by 6.25% from a year earlier. For the year, the revenue is expected to be $3.02 billion, up by 9.8% from a year earlier.
Arc Blockchain growth has stalled
Circle Internet Group has also faced more challenges, especially in its recently launched Arc layer-1 blockchain. Data compiled by DeFi Llama shows that the total value locked (TVL) on Arc has dropped to $525 million from the all-time high of $566 million. The biggest dApps in the protocol are Morpho Blue, Aave V4, Galaxy Curation, and Keyrock.
Arc’s stablecoin supply is also not growing as quickly as was initially expected. It has $666 million in stablecoin supply, with USDC having the biggest market share. This growth is substantially slower than that of Robinhood Chain, which has become one of the fastest-growing chains in the crypto industry.
Meanwhile, Circle is also being affected by the ongoing performance of the crypto industry, where Bitcoin and most altcoins have fallen. Bitcoin has dropped to $80,000, while demand for other tokens has fallen.
Circle stock price technical analysis
CRCL stock chart | Source: TradingView
The daily chart shows that the CRCL stock has dropped to $82.2 from a high of $103 in September. It has fallen below the 50-day moving average and the strong, pivot, reverse level of the Murrey Math Lines tool.
On the positive side, the stock has formed a bullish flag pattern, which is made up of a vertical line and a descending channel pattern. Therefore, there is a possibility that the stock will bounce back, potentially to the psychological level of $100. A move above that level will point to more gains towards the extreme overshoot level of $112. On the other hand, a drop below the Major S/R pivot point of $75 will invalidate the bullish outlook.
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