Circle Stock Price Forecast as White House Economists Dismiss Stablecoin Bank Risk

Circle (CRCL) stock jumped by more than 7% during the pre-market trading session on April 8 after reports that economists at the White House have dismissed claims that stablecoin rewards have the potential to harm banks. Towards the end of last month, the Circle stock price dropped due to concerns that the CLARITY Act would restrict yield on stablecoins.

White House Dismisses Claims Stablecoin Rewards Will Harm Banks

A report by White House economists has clarified that preventing crypto firms from giving their customers yield on stablecoins will not have any negative impact on community banks. The economists added that imposing this ban will only increase bank lending by a meager 0.02%.

They also said that instead of benefiting the public, such a ban would lead to a net welfare loss. Additionally, there are minimal risks that stablecoin yields will cause a decline in deposits, with the economists saying such concerns were “quantitatively small.”

“A yield prohibition would do very little to protect bank lending, while forgoing the consumer benefits of competitive returns on stablecoin holdings,” the report said.

Last month, the Circle stock price dropped sharply after a draft of the CLARITY Act revealed there were plans to get rid of the yield that is paid to stablecoin holders. This clause caused division among legislators and a delay in the bill’s passing. Now, the crypto community believes that the White House report is a green light to move forward with the rest of the bill.

Circle Stock Price Soars Past $100 Pre-Market as Buying Pressure Builds

On April 7, CRCL stock price closed trading at $94.12, up by 1.97% during the day. At press time, the stock has surged by 7.42% in the pre-market trading session and traded at $101.42. The gains not only mirror a shift in sentiment in the broader market but also optimism that the stablecoin regulatory framework in the US is gaining clarity.

The daily chart for Circle stock price reveals that buyers are coming back. The RSI is on the verge of making a higher low, which will confirm that the downtrend that began in mid-March is slowing down. If an upward reversal begins now, the first resistance is at the 61.8% Fib level of $103.69. An extended rally may push CRCL to $136.

CRCL’s key support level lies at the 50-day SMA of $86. If the price drops below this SMA, it may invalidate the bullish thesis, and the downtrend that has been ongoing for the last three weeks could continue.

With the CLARITY Act back in focus following the recent report by White House economists, CRCL may record an uptick in volatility. If the bill passes without a ban on stablecoin yield, it will likely trigger a Circle stock price rally.