Circle Stock Crashes Below Key Support: Will it Rebound After Earnings?

Circle stock price has crashed in the past few months, erasing billions of dollars in value. It plunged to the psychologically important support at $100, down sharply from the all-time high of $299. Its market capitalization has dropped to $23 billion from the all-time high of $60.17 billion. So, will the CRCL stock rebound after this week’s earnings?

Circle Stock Price Technical Analysis Ahead of Earnings

The 12-hour timeframe chart shows that the CRCL stock price has tumbled in the past few months. This crash occurred as the post-IPO momentum faded and as some early buyers, including Cathie Wood, began to exit their positions.

Circle stock has crashed below the important support level at $106.85, invalidating the double-bottom pattern. This double-bottom had a neckline at $158.63, its highest point in October this year.

The stock has also plunged below the 78.6% Fibonacci Retracement level at $114.50. Additionally, it has moved below all moving averages and the Supertrend indicator, pointing to more downside in the near term. If this happens, the next target to watch will be at $90. On the flip side, a move above the resistance level at $120 will invalidate the bearish Circle stock forecast.

Circle Faces Some Major Risks Ahead of Earnings

Circle Internet is facing some substantial risks ahead of the upcoming results. The first one is that the USD Coin (USDC) growth has largely stalled in the past few months. Data compiled by CoinMarketCap indicates that the market cap has remained stagnant at $75 billion since October.

This is notable since the company generates most of its revenue from the interest it earns on USDC assets.

The other major risk is that the stablecoin industry is becoming highly competitive, with some popular GENIUS-Act compliant tokens, such as Ripple USD (RLUSD) and PayPal USD (PYUSD), gaining market share. Other stablecoins gaining market share are Donald Trump’s USD1 (USD1), Falcon USD (USDF), and First Digital USD (FDUSD)

RLUSD, which was launched in December last year, has already crossed the $1 billion milestone. Similarly, PYUSD has surpassed $3.5 billion in assets, a significant increase from its value a few months ago.

Additionally, there is a chance that the Federal Reserve will continue cutting interest rates in the coming meetings. It has already slashed rates by 0.25% to between 3.75% and 4.0%. Additionally, data compiled by Polymarket indicates that the odds of a cut in December have increased to 75%.

Circle is negatively affected by negative interest rates as it makes most of its money by investing its supply in short-term government bonds, whose yields have continued falling in the past few weeks.

Another important risk is that the company’s lockup expiry is coming up in December, a move that will allow insiders to start selling their shares. It is common for a stock price to drop ahead of the lockup expiry.

Additionally, Circle’s upcoming layer-1 platform, Arc, is entering an already saturated market, which is currently dominated by networks like Ethereum, Solana, BNB Chain, and Tron.

Data compiled by Yahoo Finance shows that the average revenue estimate among analysts is that it generated $700 million in the third quarter, a significant increase from the $590 million it reported in the same period last year.

Summary

Circle Internet stock price made headlines earlier this year when it went parabolic shortly after its initial public offering (IPO).

Like other companies that went public recently, its gains were short-lived and the stock has now plunged by over 60% to around $100. This decline also happened amid concerns about its high valuation.

Looking ahead, the stock faces major risks heading into earnings this week and is at risk of a deeper dive now that it has invalidated the bullish double-bottom chart pattern. This means that the Circle stock price may soon crash to about $90.