The Circle of Nations (CRCL), already in crisis in the face of war with Iran, may be unlikely to benefit from the conflict.
The stock rose 10% on Monday, outpacing other crypto-related stocks, and the stock is up 86% over the past month, but is still down significantly since the peak of the post-IPO frenzy last summer.
Japanese bank Mizuho said part of the circle’s rise reflected higher oil prices as tensions in the Middle East escalated. Rising oil prices could reignite inflationary pressures and reduce expectations for Fed rate cuts.
All else being equal, stablecoin issuers are likely to benefit from higher interest rates resulting in higher yields on their invested funds.
Indeed, oil prices have soared since fighting broke out in the Gulf, with WTI crude up about 35% since February 28th. Rising energy prices tend to increase inflation, potentially limiting central banks’ ability to cut interest rates.
Positioning certainly plays a role.
The company reported solid growth in USDC supply in its fourth-quarter results, but analysts said the size of the move likely reflected crowded short-sale trading ahead of the announcement.
“The magnitude of this move wasn’t just about the headline numbers; positioning was the real catalyst,” said Markus Thielen, founder of 10x Research.
Hedge funds had piled up significant bearish bets ahead of this report, according to his data. This setup created what Thielen described as “a high-probability short squeeze rather than a fundamental revaluation.”
Short interest currently stands at about 13% of the float, which is about two days worth of coverage, according to FactSet data.
read more: Circle moved $68 million in just 30 minutes by using its own stablecoin for internal payments
