Circle Internet Group (NYSE: CRCL) might go down as the wildest IPO of the year — which is saying a lot in a year that saw Newsmax go full meme stock on its debut.
In just three weeks, CRCL exploded nearly 900%* — from $31 to just under $299. But that parabolic run is now attracting a different kind of attention: analysts calling it overvalued, traders eyeing the short side, and warning signs building under the surface.
Let’s dig into the setup — and why shorting this kind of name comes with a major asterisk.
From $31 to $299: Classic Short Squeeze Action
When stocks move like CRCL has, there’s usually more to the story than fundamentals.
CRCL went public June 5. By June 23, it had reached $298.99 — a jaw-dropping 864%* gain in under a month. That wasn’t just investor enthusiasm. That was a short squeeze, plain and simple.
Volume exploded to 99 million shares in a single session. Institutions rushed in. ARK funds loaded up. Traders piled on. And shorts — caught leaning the wrong way — were forced to cover in size. That “forced buying” is what drives squeezes vertical, and CRCL fits the playbook almost perfectly.
Now the question is whether that squeeze is over — or just gearing up again.
The Downgrade Heard Around the Crypto World
On July 8, Mizuho Securities dropped a hammer on the stock, initiating CRCL with an Underperform rating and a $85 price target — more than 59% below Monday’s close.
Their reasoning?
- Falling interest rates could kill Circle’s primary revenue stream (interest on stablecoin reserves)
- Competition is rising fast, especially with new legislation (the GENIUS Act) clearing a path for stablecoin challengers
- Revenue-sharing deals (with Coinbase and now Bybit) are eating into profit margins
- Consensus 2027 revenue estimates are inflated by 25–30%
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Wall Street isn’t unified — some firms still have buy ratings and see stablecoins as a multi-trillion-dollar market — but there’s no question sentiment is shifting.
WARNING: Short Squeeze Risk Is Still Real
Look — this is important.
Just because a stock runs too far, too fast doesn’t mean it’s safe to short. If anything, it becomes more dangerous.
CRCL has all the makings of a name that could squeeze again:
- It’s still heavily watched by retail traders
- The float is tight
- The hype around stablecoins is far from dead
- And most importantly, the stock already proved it can go parabolic
If new shorts pile in after this downgrade — and a positive catalyst hits (news, analyst upgrade, Fed hint, crypto breakout) — it could ignite another squeeze. That’s exactly how it played out last time.
If you’re shorting, have a plan:
- Use small size
- Set a tight stop
- Never average down
- Be ready to cut fast if momentum shifts
Most importantly: Understand you’re stepping in front of a moving train if volume kicks in again. Don’t guess. Trade the setup.
The Problem With IPOs — There Is No Setup
I caution my students about trading IPOs — they don’t have a chart yet. It’s hard to judge things like support and resistance when the patterns of a stock haven’t been established yet.
That said, I have some educated guesses.
The stock is trading around $200 as of Wednesday’s close — down about 33% from its highs, but still more than 6x above IPO pricing. That tells you the squeeze unwind is still in progress, not complete.
Watch these levels:
- $215 – recent resistance
- $185–$190 – short-term support
- $150 – the psychological “line in the sand” where things could really fall apart
Technically, CRCL hasn’t formed a clean base yet. It’s still volatile and directionless — perfect conditions for squeeze traps and fakeouts.
Final Thoughts
Circle’s story isn’t over. It’s a real company with real partnerships — and possibly a huge future in digital finance. But when stocks move like this, expectations start to outpace reality.
If you’re looking at the short side, be smart. The easy part of the trade might be behind us. From here, it’s about managing risk, reacting to price, and respecting momentum.
Short selling can be a powerful strategy, especially when the market gets frothy — but only if you understand what you’re getting into. CRCL already embarrassed a lot of short sellers once. Don’t be next.
* Past performance doesn’t indicate future results
This is stock news, not investment advice. StocksToTrade News delivers real-time stock market updates tailored to highlight the key catalysts driving short-term price movements. Our coverage is designed for active traders and investors who thrive in fast-moving markets, with a focus on volatile sectors like penny stocks, AI stocks, Robinhood stocks and other momentum plays. From earnings reports and FDA approvals to mergers, new contracts, and unusual trading volume, we break down the events that can spark significant price action.
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