Ark Invest dumps $51M in Circle shares amid 400% rally and valuation concerns

Circle's shares have seen a 400% post-IPO surge amid strong investor demand for exposure to the stablecoin market.

Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.

Ark Invest, the investment management firm led by Cathie Wood, has sold off over $50 million of its holdings in Circle Internet Group (CRCL), the issuer of the USDC stablecoin.

On June 16, Ark dumped 342,658 CRCL shares valued at approximately $51.7 million, based on the day’s closing price of $151.06, according to Yahoo Finance data.

The divestment affected three of Ark’s exchange-traded funds (ETFs). According to the firm’s trading file obtained by CryptoSlate, ARK Innovation ETF (ARKK) offloaded 196,367 shares. Meanwhile, the ARK Next Generation Internet ETF (ARKW) sold 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 initial public offering (IPO) earlier this month. According to Yahoo Finance data, the stock has climbed by nearly 400% to over $150, pushing the company’s valuation around $36 billion.

Market observers have linked this surge to Circle’s dominant role in the stablecoin industry. The firm’s USDC stablecoin is the second-largest in the sector with a market capitalization of more than $61 billion.

They believe that the Jeremy Allaire-led firm has benefited from increased attention to digital dollar assets amid ongoing efforts to regulate the stablecoin sector in the United States.

Hayes raises red flags over Circle

However, not everyone is celebrating Circle’s rise. Arthur Hayes, Chief Investment Officer at Maelstrom, has voiced strong concerns about the hype surrounding the firm’s valuation.

He stated:

“To be clear, Circle is grossly overvalued, but the price will continue levitating.”

According to him, Circle’s IPO success could trigger a wave of lookalike stablecoin projects with flimsy business models. He said the sector’s current excitement might echo the lead-up to the TerraUSD collapse, especially if US regulation remains light.

Hayes noted that future issuers would exploit market momentum and lean on traditional finance credentials to raise funds, even without solid fundamentals.

According to him:

“A very bankable charismatic individual will get on stage and spew all sorts of nonsense, wave his (most likely a male) hands to and fro, and convince you why the leveraged piece of dogshit he is selling is about to corner the multi-trillion dollar stablecoin total addressable market (TAM).”

Hayes continued that this avalanche of copycats would eventually populate the bubble and collapse the market. He said:

“The bubble will pop after the launch of a stablecoin issuer on a public market, most likely in the US, that separates fools from tens of billions of capital by using a combination of financial engineering, leverage, and amazing showmanship.”

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