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crypto.news 2025-06-06 13:28:14

Circle stock price pump gains steam, but a crash may follow

Circle stock price continued its uptrend in pre-market trading, cementing its position as one of the best-performing initial public offerings of the year. CRCL jumped 170% on its first trading day and climbed another 16% in the pre-market session. This surge pushed its market capitalization above $20 billion, roughly a third of USD Coin’s ( USDC ) market cap. The rally was fueled by strong retail and institutional demand for shares in the second-largest stablecoin issuer. Notably, BlackRock acquired a 10% stake in the company, while Ark Invest invested $150 million. Investors and analysts believe stablecoins will be the next big thing in finance. In a recent study, Citi estimated that the industry will be worth over $1.6 trillion by 2030, up from the current $250 billion. Circle will be a major player in the sector because of its scale today. Unlike Tether, Circle has ensured that it complies with some major laws. For example, it complies with Markets in Crypto-Assets, or MiCA, regulations, while Tether does not. Tether is likely not compliant with the United States’ GENIUS Act . Circle is also developing additional infrastructure. For example, it is working to disrupt Swift, the messaging solution that powers over $150 trillion a year. It is doing this through the Circle Payments Network, which links financial institutions and helps them process funds within seconds. You might also like: Red alert: XRP price bearish pattern points to a 50% crash Circle also aims to become a big player in the real-world asset tokenization industry through its USYC solution. USYC is a tokenized money market fund with over $378 million in assets. Investors also favor Circle for its asset-light and high-margin business model. Its strategy involves taking customer deposits and investing them in liquid assets like Treasuries. In its case, over 90% of its funds are in the Circle Reserve Fund, which BlackRock manages. Is Circle stock a good buy today? Circle is a strong company in a growing industry, and its stock will likely rise in the long term. However, it also faces some short-term risks. The biggest risk is that the Federal Reserve may start cutting interest rates this year, driving down its returns. Further, the stablecoin industry is becoming highly competitive. In addition to Tether, companies like Ripple and PayPal have launched their stablecoins. Big U.S. banks are considering launching their coins, while Santander is in an advanced stage of doing the same. The short-term risk is that Circle stock may dive in the next few days as the post-listing hype fades. For example, Webull stock recently jumped from $25 to $80 shortly after its IPO and has now crashed to $10. Webull stock surged after IPO and then crashed | Source: TradingView Similarly, CoreWeave stock initially soared from $35 to $64 and then dropped to $34 shortly after the IPO. It has since recovered to $135. Therefore, it is likely that Circle stock will pull back as the hype fades and then it can restart a more sustained and reasonable uptrend. You might also like: US banks plot joint stablecoin as regulation looms over crypto sector

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