Circle Internet Group Inc. (CRCL) shares are having a rough Friday, sliding as Bitcoin (BTC) loses ground and investors grow jittery about the regulatory landscape for stablecoins. The stock was down 4.38% at $61.42 at the time of publication, even as the Nasdaq climbed 0.98% and the S&P 500 rose 0.64%. It's a classic case of crypto-specific worries overriding the broader market's good mood.
The company is set to report its second-quarter results on Aug. 5, and Wall Street is looking for earnings of 19 cents per share, a nice turnaround from the 43-cent loss a year earlier. Revenue is expected to jump to $734.7 million from $658.1 million. But the numbers might not be the only thing on investors' minds.
Crypto Stocks Hit By Regulatory Concerns
The whole crypto sector is feeling the heat, and it's not just Circle. Investors are increasingly skeptical that the CLARITY Act will make it through the current Congressional session. JPMorgan analysts, led by Nikolaos Panigirtzoglou, put the odds of passage at just 37% in a report published Wednesday, as cited by CoinDesk. That's not exactly a vote of confidence.
The analysts warned that delays could have real consequences: "The longer the approval of the Clarity Act is postponed, the greater the threat to crypto markets from the growth of tokenization and blockchain-based applications eventually being absorbed by incumbent market infrastructure rather than accruing to public crypto networks." In plain English, if the bill stalls, traditional finance might swoop in and take the spoils that crypto networks were hoping to grab.
Adding to the frustration, Sen. Cynthia Lummis (R-Wyo.) took to X on Wednesday, venting ahead of the Senate's summer recess: "After nearly 11 months of giving almost everything asked of us, I genuinely don't know what else my Democrat colleagues need before we act." The political gridlock is palpable, and it's weighing on sentiment across crypto-linked stocks, including Coinbase Global Inc. (COIN), which reported its own Q2 results late Thursday.
Analyst Cuts Target Ahead Of Results
Bernstein also threw some cold water on Circle this week. On Wednesday, the firm slashed its price forecast by 25%, bringing it down to $140 from $190, just days before the earnings report. That's a big cut, even if the stock still carries a Buy rating with an average price target of $109.58 among analysts.
Other recent analyst moves paint a mixed picture:
- Mizuho: Upgraded to Neutral, but lowered its forecast to $45.00 (July 31)
- Raymond James: Initiated with Market Perform (July 22)
- Mizuho: Downgraded to Underperform, lowering its forecast to $50.00 (July 14)
It's a bit of a tug-of-war between those who see long-term potential and those who are worried about near-term headwinds.
Circle Internet Group Technical Analysis
From a chart perspective, Circle is still in a tough spot. The stock is trading below its key moving averages, which is a sign that the longer-term downtrend hasn't reversed course. Specifically, it's 3.9% below its 20-day simple moving average, 20.5% below its 50-day average, and more than 30% below both its 100-day and 200-day averages. Ouch.
Things got even more bearish back in June when the 50-day moving average crossed below the 200-day moving average, forming what technicians call a "death cross." That's a classic bearish signal that often keeps traders on edge.
That said, there are some glimmers of hope. The MACD indicator is still above its signal line, which suggests that selling pressure has eased a bit. But analysts caution that any rallies could hit a wall until the stock reclaims those key moving averages. For now, traders are watching resistance near $73 and support around $58.50.
Circle Internet Group Top ETF Exposure
For those who like to track the flow of funds, Circle has some notable ETF exposure:
- ARK Innovation ETF (ARKK): 3.65% Weight
- ARK Next Generation Internet ETF (ARKW): 3.44% Weight
- ARK Blockchain & Fintech Innovation ETF (ARKF): 4.65% Weight
Why does this matter? Because CRCL carries significant weight in these funds, any big inflows or outflows from these ETFs will likely force automatic buying or selling of the stock. So, keep an eye on the ARK funds if you're watching Circle.
Circle Internet Group Price Action
At the time of publication on Friday, Circle Internet Group shares were down 4.38% at $61.42, according to market data. With earnings just around the corner, the next few days could be pivotal for the stock.
