Circle Stock Analysis as USDC Monthly Volume Jumps to $6.2 Trillion

Circle stock price has suffered a harsh reversal in the past four days, erasing some of the top gains made earlier this month. CRCL dropped to $93.65, its lowest level since March 3rd. This retreat will likely be limited as the USDC activity jumps, with the monthly volume hitting $6.2 trillion.

Circle Stock Price Crashed Amid CLARITY Act Concerns

The main reason why the CRCL stock price crashed is that investors reacted negatively to a leaked draft of the CLARITY Act.

That report showed that the Senate will likely pass a bill that agrees with the policies being advocated by banks. If approved, these policies mean that the CLARITY Act will block crypto exchanges like Coinbase, Kraken, and Robinhood from offering stablecoin rewards.

In theory, such a bill will negatively impact Circle by leading to weaker inflows into USDC from investors seeking to generate stablecoin income.

However, in reality, the bill will likely have a minimal impact on inflows as most people don’t always focus on rewards when using USDC.

The most recent data showed that the USDC stablecoin growth has continued in the past few months. Its market capitalization started the year around $70 billion, a figure that has surged to nearly $80 billion today.

Similarly, the number of stablecoin addresses has jumped to over 15.4 million. Also, the amount of adjusted transaction volume in USDC has jumped to over $6.2 trillion in the last 30 days.

Also, data shows that while the USDT market capitalization is over $184 billion, its transaction volume was over $1.2 trillion during the same period.

USDC Supply and Interest Rates

Meanwhile, the rising USDC supply is occurring as the US-Iran war takes a new twist. Yemen’s Houthis have joined the war and started launching missiles towards Israel. The group may continue their involvement by restricting transport in the Red Sea.

At the same time, US military officials have started arriving in the Middle East, and the Washington Post writes that the US is considering launching a ground operation in Iran.

Therefore, there is a likelihood that crude oil and other energy prices will continue rising in the coming months or weeks. As a result, US consumer inflation will likely jump from 2.4% in February to over 4% later this year.

Soaring US inflation is a bullish thing for the Circle stock price because of its business model, which involves investing its cash reserves in short-term government bonds.

The most recent data shows that the 2-year yield has jumped from 3.3% earlier this month to nearly 4% today. Therefore, the company will make more money as it invests its reserves into these assets.

Most importantly, the other long-term catalyst for the company is its boost in non-interest income from launching more businesses. It owns the USYC asset, which has become the biggest on-chain money market fund in the industry with nearly $2.5 billion in assets.

The company has also launched the Circle Payment Network (CPN), which aims to disrupt the Swift network by making it easier for companies to send money.

CRCL Stock Price Technical Analysis

The daily timeframe chart shows that the CRCL stock has retreated in the past few days. It has dropped from a high of $136 on March 17 to the current $93.

The chart shows that the reversal occurred after it approached the 38.2% Fibonacci Retracement level.

It has moved below the 23.6% retracement level. At the same time, the Average Directional Index (ADX) has pulled back from 51 to the current 40, a sign that the sell-off is losing momentum.

Therefore, the most likely Circle stock price forecast is bullish, with the next important target to watch being at $136, its highest point this month. A move above that level will point to more gains, potentially to the 50% Fibonacci Retracement level at $175.