Circle (CRCL) stock is facing a tough time in the market. The stock dropped 3.28% today to trade at $77.95. This decline comes as a fresh wave of tradable shares enters the market, making the stock highly volatile.

Why is Circle Stock Dropping?

Two main factors are driving the current selloff. First, there has been a large number of newly issued Circle coins. If the number of shares going out to the public suddenly goes up, that means that there is a drop in the price unless the demand increases.

Second, Circle’s asset values of its core business are declining. The supply of its USDC stablecoin sharply declined by $4.7 billion, from $79 billion to $74 billion. For Circle, this decrease will cause a loss since it reduces the amount of interest that the company can earn from the reserves. To add to the pressure, company insiders have made 155 open market trades over the past six months, which has added to the market uncertainty.

Technical Indicators Signal Heavy Selling

CRCL’s stock is also below important moving averages like the 20 day moving average of $81.35 and 50 day equivalent of $85.68. Its 200 day average sits much higher at $99.54. Trading below these lines indicates a strong short term bearish trend.

Momentum trends in the market indicate strong bear pressure. The Relative Strength Index (RSI) is 38.4, indicating the stock is technically oversold. An oversold measure is sometimes followed by a quick rally, but the trend is strong this time.

What is Next for CRCL Stock?

Based on this, market data is pointing to a 77% probability that it will continue its decline towards its next significant support on the chart, $73.66. However, there is only a 23% probability of an increase soon.

Most experts feel the stock will stay in a narrow range between $73.66 and $82.95. Clearly, a multi-deeper value could occur if the price goes beneath $73.66. But, there is a chance that CRCL will experience a short-term recovery if it can break above the resistance level at $82.54. At this moment, traders need to keep the $73.66 area close on their radar to see if the stock can finally settle.