Circle stock price crashed after earnings: Will it rebound?

Circle stock price has been in a strong freefall in the past few months, a situation that accelerated after it published its second quarterly results as a publicly traded company. It plunged to a low of $86, down sharply from its all-time high of $300. This plunge has brought its market cap to $19.9 billion, down from a record high of $60 billion.

Circle stock crashed after earnings

Circle stock price has been under pressure in the past few months as the momentum it had after going public faded. The crash continued after it published its financial results, which showed that its business was doing well but slowing. 

These numbers showed that the USDC supply ended the quarter at $73.7 billion, up by 108% from the same period last year. This figure has now grown to over $75 billion.

Circle’s revenue came in at $740 million, up by 66% YoY, while its net income jumped by 202% to $214 million. This makes it a highly profitable company.

One of the main news after its earnings report was that the company was about to launch the mainnet for its Arc layer-1 solution. It has already attracted over 100 companies, including popular brands like Aave to the testnet. 

The company also plans to launch the Arc token on its network. This is a major news as it could unlock millions or even billions in value depending on its performance. Some popular layer-1 networks like Ethereum and Solana have achieved multi-billion dollar valuations over time. 

Circle has also continued to expand its payment network business. Circle Payment Network (CPN) aims to leverage the stablecoin technology to supercharge transaction speeds and lower the cost.

Why CRCL stock dropped after earnings

Circle stock price crashed after earnings for several reasons. First, there are concerns that the USDC growth has stalled as the market cap has remained at $75 billion in the past few weeks. Artemis data shows that the transaction volume has dropped in the last 30 days. 

The other main risk is that analysts are predicting more interest rates by the Federal Reserve. Data on Polymarket shows that the odds of a cut in December have jumped to 75%.

Rate cuts will accelerate next year when Donald Trump appoints the replacement to Jerome Powell. All people who have been mentioned as potential successors have hinted that they will cut rates. This is notable for Circle as the company makes most of its money from interest. 

Finally, Circle’s lockup expiry is coming up in December, allowing insiders to sell their shares. Stocks normally drop when there is a lock-up expiration as there are concerns that insiders will dump their shares. 

Circle share price technical analysis

The daily chart shows that the stock has been in a strong downtrend in the past few months. It has crashed from a high of $299 to the current $86.

The stock has moved below $108, invalidating the double-bottom that was forming. It has moved below all moving averages, while all oscillators have pointed downwards. 

Therefore, the most likely scenario is where the CRCL stock continues falling as sellers target the key support at $80. A move above the resistance at $108 will invalidate the bearish outlook.

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