Top 3 Reasons Why the Circle Stock is Set to Surge Soon

Key Insights

• Circle stock price may rebound soon as the US bond yields jump.
• The company will benefit from the ongoing stablecoin growth.
• It has formed a cup-and-handle pattern, pointing to more gains.

Circle stock price retreated this week after rallying sharply earlier this month. CRCL dropped from a recent high near $140 to around $114 as broader crypto-related equities weakened alongside Bitcoin.

Despite the pullback, several macro and industry trends continue supporting the company’s longer-term outlook.

Circle Stock Price to Benefit From the Ongoing Bond Yields Surge

A potential catalyst for the CRCL stock price is the fact that US bond yields have continued soaring in the past few weeks.

Data shows that the two-year yield jumped to over 4% today, a trend that will likely continue in the coming weeks now that inflation continues rising.

A report released by the Bureau of Labor Statistics (BLS) showed that the headline consumer price index soared to 3.8% last month from the same period a year earlier.

Another one showed that the headline Producer Price Index (PPI) rose to 6% in April. While most traders focus on the CPI report, the reality is that the PPI is important as companies tend to pass these costs to customers.

Inflation will likely continue rising now that the US has hinted that it may resume its war against Iran soon. In a statement on Sunday, Trump warned that time was running out.

The second phase of the war would be a major one for the world economy, leading to higher inflation rate. As a result, higher inflation will drive bond yields higher, a move that will benefit Circle.

Circle’s main business is offering stablecoins, with the USDC having a market capitalization of over $78 billion. This business makes most of its money by investing these reserves in short-term government bonds, which are now yielding more.

Growing Stablecoin Market Industry After the CLARITY Act

The other important catalyst for the Circle stock price is the growing stablecoin industry, which analysts believe will ultimately get to $4 trillion in the market by 2030. This would mean a robust growth from the current level of $310 billion.

USDC remains the second-most-popular stablecoin in the world, after Tether’s USDT. While competitors like the Ripple USD (RLUSD) and PayPal USD (PYUSD) have come up, its market share has remained intact. And thanks to its robust integrations, chances are that no coin will fully disrupt it.

Therefore, if the market capitalization of all stablecoins hits $4 trillion and all factors remain constant, it means that the current market capitalization of all stablecoins will be between $800 billion and $1.2 trillion. If it hits $1.2 trillion and short-term bond yields remain at 4%, it will generate $48 billion in revenue.

Meanwhile, Circle will likely continue attracting more USDC demand as the Circle Payment Network (CPN) grows. This is an important business that seeks to disrupt the Swift network, which processes trillions of dollars a year.

Also, the surge will be boosted by the Arc network, a layer-1 network that raised over $200 million in funds from some of the biggest venture capital firms.

Circle Stock Price Technical Analysis

The other top reason why the CRCL stock may be ripe for a strong surge is that it has formed the highly bullish cup-and-handle pattern. Its upper side is at $135, while the lower side is at $86.23. In most cases, the C&H pattern normally leads to a strong rebound.

The stock is now in the handle section of this pattern. It has also remained above the 100-day Exponential Moving Average (EMA), a sign that bulls remain in control.

Therefore, the most likely scenario is where the CRCL stock price rebounds in the coming days or weeks. The initial target will be at $135. A move above that level will point to more gains, potentially to the psychological level of $150.

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