Key Insights
- Circle stock price has jumped to its highest point in months.
- The USDC market cap has started rising amid the ongoing crypto market rally.
- Circle will launch the Arc Layer 1 network in September.
Circle stock extended its recovery Tuesday as investors tracked rising USDC circulation and the approaching launch of Circle’s Arc blockchain. CRCL closed Aug. 25 at $92.02 after gaining 4.9% and reaching an intraday high of $93.40.
The stock has rebounded sharply from its August low near $58 as crypto market conditions have improved. Circle is also preparing to launch Arc on the public mainnet on Sept. 16, adding another potential growth driver beyond its core stablecoin business.
Circle Stock Jumps as USDC Growth Continues
CRCL stock has remained in a recovery mode, helped by the ongoing gains in the crypto market. Bitcoin retested the important resistance level of $80,000 this week, while most altcoins, including ETH, XRP, and Solana, have jumped by double digits. The market capitalization of all coins has jumped to over $2.6 trillion, while the Fear and Greed Index jumped to the extreme greed zone of 80.
Historically, a crypto market rally normally drives investors to stablecoins, which are used to trade. This explains why the USDC market capitalization has jumped to $73.5 billion from this month’s low of $71.75 billion. Soaring USDC growth is bullish because Circle makes most of its revenue by investing its stablecoins in short-term government bonds.
Still, there is a major risk Circle faces: it is unclear whether this crypto market rally will be prolonged or just a dead-cat bounce. A DCB is a situation where assets jump briefly and then resume the downward trend.
Potential US Bond Yields Jump
The other potential catalyst for the CRCL stock is that US bond yields will likely continue rising. The two-year yield is trading at 4.22%, while the shorter-term notes are also yielding over 4%.
Most notably, the US public debt is soaring. After crossing the $40 trillion mark last week, it has already moved to $40.7 trillion. All factors constant, it will cross the $50 trillion mark in 2030 or even earlier.
This is happening at a time when China and Japan are gradually selling their US bonds because of the changing US political situation and domestic issues. Indeed, the US Treasury had to intervene as long-term bond yields jumped.
Therefore, there is a risk that bond yields will remain at an elevated level for a while. This will benefit Circle because it invests in the relatively safer government bonds.
Circle Arc Mainnet Launch Set for Sept. 16
The other key catalyst that may boost the CRCL stock is the upcoming Arc Layer 1 launch. Arc is a layer-1 network that aims to be a better alternative to popular chains such as Ethereum, Solana, and BNB Chain.
Circle has already raised over $200 million from venture capital companies, with Arc handling millions of transactions in its testnet. It will launch in September this year and may boost enthusiasm for CRCL stock.
On the positive side, the chain will likely achieve strong results like Robinhood Chain, which has become an instant hit in the industry. It may also achieve the success that Coinbase’s Base achieved. The risk, however, is that Arc may become one of the many Ethereum-killers that don’t succeed.
CRCL Stock Breaks Above Key Resistance
The daily chart shows that the CRCL stock bottomed at $58.30 in August and then started going back up. It has now soared to $90, its highest level since June. Along the way, it jumped above the crucial resistance level of $72.72, its July 20th high.
The stock has also jumped above the Supertrend indicator. Therefore, the stock will likely continue rising as bulls target the next key resistance level at $100. The risk, however, is that it has formed a small island reversal pattern, which often leads to a reversal.
The post Circle Stock Forecast Amid USDC Growth and Upcoming Arc L1 Launch: What Next? appeared first on The Market Periodical.