\documentclass[tikz]{standalone}
\usepackage{amsmath}
\usetikzlibrary{arrows.meta,decorations.pathmorphing}
\begin{document}
\begin{tikzpicture}[>=Stealth]
\draw[->,thick] (-3.5,0) -- (3.5,0) node[right] {$x$};
\draw[->,thick] (0,-3.5) -- (0,3.5) node[above] {$y$};
\draw[gray,very thin] (-3,-3) grid (3,3);
\draw[dashed,red] (0,0) circle (1.5cm);
\draw[red,thick,decorate,decoration={snake,amplitude=1pt,segment length=1cm}] (0,0) circle (1.5cm);
\end{tikzpicture}
\end{document}
you can change the amplitude or segment length, but overall the snake path is slightly higher than the circle
Brief outline of the bug
Minimal working example (MWE)
you can change the amplitude or segment length, but overall the snake path is slightly higher than the circle