Circle Stock Starts Elliot Wave 3 as Analyst Sees Huge Opportunities Ahead

Key Insights

• Circle stock could be entering the third phase of the Elliot Wave pattern.
• A top analyst expects the price to continue doing well this year.
• The company is diversifying its business to reduce overreliance on interest income.

Circle stock has crawled back in the past few days, rising from this month’s low of $85 to $108 today. It is in the process of forming the third phase of the Elliott Wave pattern. This pointed to an eventual rebound, potentially to $200 in the near term.

Circle Stock Moves to Wave 3 of Elliot Wave Pattern

CRCL stock price crashed to a record low of $48.80 in February. It then surged to a high of $135 on March 17. This surge accelerated after it published its earnings report. This showed its strong revenue growth as the stablecoin assets on its platform jumped.

Circle then started pulling back, eventually reaching a low of $84. This retreat happened as investors booked profits and after a top analyst downgraded the company, warning about its narrowing margins.

A closer look shows the stock has been slowly forming the impulse Elliot Wave pattern. It has already completed the first phase of this pattern, which is usually bullish.

This pattern is then followed by the second stage, which normally retraces the first one to some point. In this case, the retracement happened to the 61.8% Fibonacci Retracement level, where most rebounds normally happen.

The stock has now started moving to the third stage of, which is known for being the longest bullish phase. If this happens, the stock will first jump to the key resistance level at $137. That marks its highest level this year.

A break above this level will point to more gains, with the initial target being the 50% retracement level at $175. It will then eventually soar to the psychological level at $200, which is about 97% above the current level.

The bullish case is also made by the fact that the CRCL stock seems to be forming an inverted head-and-shoulders pattern. This often leads to a strong bullish breakout.

Top Analyst Explains How Circle Can Continue the Momentum

Gab Growth, a top analyst specializing in asymmetric investments, released a bullish report on CRCL stock price.

The report highlights strong upside potential for the stock. In his report, he noted that Circle’s business continues to grow, with the amount of stablecoins in circulation continuing the uptrend.

Data shows that USDC supply in circulation has jumped sharply. It rose from $60 billion in January to $78.8 billion today.

The surge in USDC in circulation is important for the company because it mostly makes money through interest rates. High interest rates boost revenues because the company invests most of its cash in short‑term government bonds. This strategy allows it to earn more from rising yields.

Circle’s business performs well when USDC circulation rises. It also benefits when short‑term government bond prices fall, pushing their yields higher.

Challenges and Diversification

According to Gab Growth, Circle’s elephant in the room is its partnership with Coinbase. It owns a minority stake in the company. This agreement means that Coinbase takes all the interest it generates on the USDC stablecoin on its platform.

Ideally, Circle would make no money if all the USDC in circulation remained in Coinbase. Indeed, the most recent results showed that Coinbase made over $1 billion in stablecoin revenue last year. Data shows that the on-platform USDC moved from 10% in January last year to 17% in the last quarter.

The analysts also believe that the revenue diversification will help Circle to grow its business. Some of these initiatives include the upcoming Arc layer 1 launch. They also feature the Circle Payment Network (CPN) and the USYC, which has become the biggest on‑chain money market fund.

The “other” segment will take time to grow over time, generating more revenue for the company over time. This is a similar model that other banks have done in the past few years.

In addition to generating revenue from interest, they are making money in other areas like ATM fees and subscriptions.

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