Ark Invest, the renowned investment management firm led by Cathie Wood, has recently made a significant move by selling off over $50 million of its holdings in Circle Internet Group (CRCL), the issuer of the USDC stablecoin. This decision was reflected in Ark’s divestment of 342,658 CRCL shares on June 16, with a total value of approximately $51.7 million based on the day’s closing price of $151.06, as reported by Yahoo Finance data.
The impact of this divestment was felt across three of Ark’s exchange-traded funds (ETFs). According to the firm’s trading file obtained by CryptoSlate, the ARK Innovation ETF (ARKK) sold 196,367 shares, while the ARK Next Generation Internet ETF (ARKW) offloaded 92,310 shares, and the ARK Fintech Innovation ETF (ARKF) parted with 53,981 shares.
Circle’s stock has experienced a notable rally since its recent initial public offering (IPO), with the stock price surging by nearly 400% to over $150, resulting in a valuation of around $36 billion. This surge has been attributed to Circle’s prominent position in the stablecoin industry, particularly with its USDC stablecoin being the second-largest in the sector with a market capitalization exceeding $61 billion.
Market observers believe that Circle has benefited from the increased attention towards digital dollar assets, driven by ongoing regulatory efforts in the United States to oversee the stablecoin sector.
Despite the positive sentiment surrounding Circle, not everyone shares the same optimism. Arthur Hayes, the Chief Investment Officer at Maelstrom, has raised red flags over the hype surrounding the firm’s valuation. In a recent statement, Hayes expressed concerns about Circle being grossly overvalued, cautioning that the price may continue to rise despite underlying fundamentals.
Hayes warned about the potential emergence of lookalike stablecoin projects with weak business models, drawing parallels to past instances like the TerraUSD collapse. He emphasized that the current excitement in the sector could lead to the proliferation of copycat projects that lack solid foundations.
Looking ahead, Hayes predicted that the market could be flooded with unstable projects that ultimately contribute to a bubble burst. He highlighted the vulnerability of investors to charismatic individuals promoting questionable stablecoin projects that could eventually lead to significant losses in the market.
In conclusion, while Circle’s recent success has positioned it as a key player in the stablecoin industry, it is essential for investors to exercise caution and conduct thorough due diligence in evaluating the long-term viability of such projects in an evolving regulatory landscape.