Circle Stock Price Forecast as the GENIUS Act Passes: Buy or Sell?

Key Insights:

• Circle stock rose after the House voted for the GENIUS Act.
• The act will streamline the stablecoin industry, where Circle is a major player.
• Circle’s stablecoin assets have jumped to over $63 billion.

Circle stock price jumped over 11% on Thursday as lawmakers passed the GENIUS Act. CRCL spiked to $220, its highest since June 27. The price surge followed renewed optimism over regulatory clarity for the stablecoin sector.

Despite this rally, the stock remains down over 25% from its all-time high. The question now is whether Circle stock price will continue to climb as the GENIUS Act reshapes stablecoin regulation.

Circle to Benefit from the GENIUS Act

American politicians in the House of Representatives voted for the GENIUS Act on Thursday. This bill provides the guidelines to govern stablecoins, cryptocurrencies backed by US dollars.

Circle will be a key beneficiary of this because its business revolves around stablecoins. As a result, having clear regulations will help it reduce the regulatory risks.

Circle will also benefit because Tether, its biggest competitor, does not meet some bill guidelines. For example, the GENIUS Act mandates that all USD stablecoins be backed with US dollars and government bonds.

Fiat currencies, bonds, and other assets like gold and Bitcoin back tether’s USDT. This means that Tether will either change its business model and liquidate its other holdings or be delisted from US exchanges.

If this happens, exchanges may decide to transfer their customer holdings to other stablecoins, such as USDC. Such a move will increase Circle’s USDC holdings and boost its revenues.

The GENIUS Act will not lead to higher regulatory burdens because Circle already offers its disclosures and is audited.

USDC Supply is Growing

Meanwhile, another potential catalyst for the Circle stock price is the growing supply of USDC coins. CoinGecko data shows that the total USDC in circulation are worth over $63 billion, up from the January 1 level of $43 billion. The circulation has almost doubled from the same period last year.

This growth is expected to continue over the next few years. Citigroup expects that the market cap of all stablecoins will reach $1.6 trillion by 2030. On the other hand, Visa projects the supply to surge to over $3.7 trillion during that period.

If this happens, Circle’s assets will surge in the coming years, leading to higher revenues and profits. Higher assets will also offset the impact of falling interest rates.

Potential Risks for Circle stock

Circle stock faces two key risks that could lower it in the coming months. First, there are signs that the Federal Reserve will start to cut interest rates later this year.

Bloomberg reported that Donald Trump was considering firing Jerome Powell, who has resisted cutting interest rates. If he does that, and if the decision is allowed by the courts to stand, then there is a likelihood that the new Fed Chair will deliver more rate cuts.

Circle’s business performs well when interest rates are high, as it typically invests customer funds in liquid, short-term bonds. As such, a drop in rates will lead to slow revenue and profitability growth.

The other risk is that Circle is a highly valued company with a market capitalization of $20 billion lower than its total assets. In some cases, highly overvalued companies often retreat, especially when they report weak financial.

CRCL Stock Price Analysis

The hourly chart indicates that the Circle share price has remained relatively stable over the past few days. It formed the highly bullish double-bottom pattern whose neckline was at $215. It has already moved above that level, signaling a bullish breakout.

The stock has also jumped above the 50-period moving average, while the Relative Strength Index (RSI) points to higher momentum. Therefore, the stock will likely keep rising, and potentially retest the all-time high of $297.

Summary

Circle stock price surged after its initial public offering, making it one of the biggest companies in the crypto industry. It then retreated and entered a bear market as the hype eased and as some investors booked profits. The stock will likely bounce back after the GENIUS Act and s investors wait for the upcoming earnings.

Disclaimer

This article is for informational purposes only and provides no financial, investment, or other advice. The author or any people mentioned in this article are not responsible for any financial loss that may occur from investing in or trading. Please do your research before making any financial decisions.