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Circle stock has pulled back from its August highs, even as the company has experienced substantial tailwinds, including the USDC market capitalization rebound, US Treasury yields jump, and the ongoing growth of Arc, its layer-1 network. CRCL was trading at $89, down from last month’s high of $102.
Circle Stock Has Retreated Despite Arc Layer 1 Growth
CRCL stock has remained under pressure despite the warm reception of Arc, its layer-1 network, which it launched on September 16th.
Third-party data shows that the network is seeing strong traction among investors and developers. A good example of this is in the number of dApps in the ecosystem. Data shows that these dApps have jumped to 59.
The total value locked (TVL) in the ecosystem has jumped to over $500 million, with the biggest players being Morpho Blue, Aave, Uniswap, Aerodrome, Argus World, and Archery. This adoption is a sign that more people are using the platform. Its TVL has surpassed that of other popular cryptocurrency projects such as Cardano, IOTA, Algorand, and EOS.
At the same time, the amount of stablecoins in the network is still strong. It has accumulated over $458 million in coins, most of them being USDC and EURC. This is important because Circle built the network for real-world asset tokenization.
Most notably, traders are using dApps in the network to trade. These DEX networks have already handled trading volume of over $839 million, and the figure may surpass the $1 billion milestone this week. Dapps in its network have made over $7.2 million in fees since its launch.
Arc’s success mirrors that of Robinhood Chain, the layer-2 network that Robinhood launched a few months ago. Its network has continued to grow and has already attracted billions of assets.
Circle Internet is Benefiting From High Bond Yields
Meanwhile, Circle Internet Group is benefiting from the ongoing performance of the bond market. Data shows that the ten-year yield soared to 5.24%, its highest level in years. Also, the 30-year and the five-year rose to 5.5% and 5.06%, respectively.
In Circle’s case, the three-month yield has jumped to 4.19%. This is crucial because the company generates money by investing its stablecoins into short-term government bonds. The GENIUS Act prohibits these firms to invest in other assets like Bitcoin, gold, and corporate bonds.
The rising bond yields is happening as the USDC market cap continues rising. It has jumped to over $75 billion. If the inflows continue, the figure will cross the $80 billion mark in the coming months.
One reason for the surge is the recent partnership with Binance that is already successful. Indeed, CoinMarketCap shows that Binance is the most active exchange in USDC trading.
Therefore, these events mean that Circle’s business may continue doing well this year. The average estimate is that its third-quarter revenue will come in at $786 million, up by 6.3% from a year earlier. It is expected to jump by 9.5% this year and 24% next year.
Circle Stock Technical Analysis
Technically, however, Circle’s stock shows some weakness. It has formed a diamond reversal pattern, a common bullish reversal in technical analysis. The stock is also about to fil the gap that formed in August this year.
The stock has also formed a bearish divergence pattern, which occurs when the Relative Strength Index (RSI) and the MACD are falling while the asset rises. Therefore, there is a risk that the stock may drop to $78, its lowest level on September 16.
