Ark Invest Sells $51M in Circle Shares Amidst Concerns

By: Eliza Bennet

Ark Invest, under the leadership of renowned investor Cathie Wood, has recently executed a substantial divestment in Circle Internet Group shares worth over $51 million. This sale comes amidst a remarkable 400% surge in Circle's share price since its initial public offering (IPO) earlier this month. On June 16, Ark sold 342,658 shares of Circle, the issuer of USDC stablecoin, at a closing price of $151.06 each.

This decision impacted Ark's various exchange-traded funds (ETFs), including ARK Innovation ETF, ARK Next Generation Internet ETF, and ARK Fintech Innovation ETF. According to a trading file, these ETFs offloaded significant quantities of CRCL shares, reflecting Ark's caution despite Circle's increasing market valuation which has soared to an estimated $36 billion.

Circle's rapid ascent can be attributed to its leading position within the stablecoin sector, underscored by its USDC stablecoin, boasting a market capitalization exceeding $61 billion. The company's surge coincides with growing regulatory focus on stablecoins in the United States, as stakeholders work toward legislative clarity around these digital assets. However, not all market observers are optimistic.

Arthur Hayes, Chief Investment Officer at Maelstrom, has expressed skepticism regarding Circle’s inflated valuation amidst IPO success. He warns of potential instability reminiscent of prior market corrections such as the TerraUSD collapse. Hayes predicts an influx of similar stablecoin ventures with potentially unsustainable business models if regulation remains insufficient. He foresees a speculative bubble where impressive financial engineering may ultimately lead to market upheaval, separating investors from significant capital investments.