The circle’s stock price has recently been pulled back as the momentum of the opening offer for beginners has slowed down.
Circle Internet trades at $192, down more than 35% since its peak in June, with its valuation reduced from $70 billion to $42 billion.
Several factors contribute to the loss of momentum in CRCL. First, the decline followed a downgrade from JPMorgan, the bank that led the IPO. The company began coverage with a neutral rating and set a price target of $80, well below its current level.
Secondly, there is growing concern that the circle is being significantly overrated. Its market capitalization is about $20 billion below USDC’s $62 billion valuation, far above revenue and profit figures.
Circle’s 2024 financial results show revenue of $1.67 billion, up from $772 million the previous year. Net income reaches $267 million, meaning a subsequent price-to-earning ratio of 157, an expensive multiple by most standards.
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Third, USDC’s market capitalization growth has stagnated. According to Coingecko, it has hovered about $61.6 billion in a few months. As Circle earns a large portion of its revenue from interest on US government bonds, the plateau of Stablecoin’s supply could place emphasis on future growth.
Revenue growth could be affected by the Federal Reserve when interest rate cuts resume. In a statement Tuesday, Jerome Powell said that if future data shows inflation has fallen in June, banks could cut their prices immediately in July.
The circle’s stock price also plummeted as some investors booked profits after substantial post-IPO gatherings. A good example of this is Cathie Wood, whose Ark Invest has sold millions of worth of shares in the past few weeks.
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Circle stock price analysis
CRCL Stock Chart | Source: TradingView
The hourly chart shows the CRCL has dropped from an all-time high of $298 to $192. On a positive note, the stock found support at a 50% Fibonacci retracement level of nearly $180.
It also forms a falling wedge pattern defined by two descending and converging trend lines. This is generally considered a bullish inversion formation in technical analysis.
If buyers intervene, Circle Stock can resume uptrends. The next level to watch is $298, the highest ever. Continuation of revenues could lead to sustained interest in stubcoin infrastructure ahead of revenues.
