TLDR
- Circle stock dropped 15% Tuesday as Wall Street warned of rising stablecoin competition risk following regulatory clarity
- ARK Invest dumped another $110M worth of Circle shares Monday, totaling $353M in sales since June 16
- Compass Point initiated coverage with neutral rating and $205 price target, citing future competition concerns
- Fiserv announced plans to launch its own stablecoin using Circle’s infrastructure, highlighting both opportunity and competition
- Circle’s market cap reached $63.9 billion, approaching its USDC stablecoin’s $61.7 billion market value
Circle’s stock took a beating Tuesday, falling 15% as investors started questioning whether the stablecoin company’s recent rally had gone too far. The shares closed at $223, ending a three-day winning streak that had pushed the stock near $300.
The selloff came as Wall Street analysts warned that the same regulatory clarity driving Circle’s gains could also unleash a wave of new competitors. Compass Point’s Ed Engel initiated coverage with a neutral rating, setting a $205 price target that sits below current levels.
“We expect competition to accelerate after stablecoin legislation passes,” Engel wrote. The analyst pointed to the GENIUS Act, which passed the Senate last week and would create a federal framework for stablecoins.
Circle generates most of its revenue from reserve income. The company earns interest on assets backing its USDC stablecoin, largely short-term US Treasurys. It also makes money from blockchain integration services and redemption fees.
The regulatory bill that initially boosted Circle shares is now seen as a double-edged sword. While it legitimizes the stablecoin business, it also makes it easier for traditional financial companies to enter the space.
Distribution Partners Hold the Key
Engel stressed that distribution partnerships will determine market share going forward. Circle already pays about 60% of its reserve revenue to distribution partners, mainly Coinbase and Binance.
The analyst believes Circle needs mainstream business partnerships beyond crypto exchanges. “While Coinbase and Binance are ideal partners for capturing demand from crypto speculators, we believe USDC needs to partner with mainstream businesses,” he wrote.
Monday brought news that could support this strategy. Fintech giant Fiserv announced plans to launch its own stablecoin called FIUSD by year-end, using infrastructure from both Paxos and Circle.
Seaport’s Jeff Cantwell called this a “nice win” for Circle. He initiated coverage last week with a buy rating and $235 price target.
ARK Continues Major Selloff
Adding pressure to Circle shares, Cathie Wood’s ARK Invest continued its selling spree. The firm dumped another 415,844 shares Monday for $109.6 million.
Cathie Wood and Ark Invest sold 306,921 shares of Circle $CRCL stock today
Here's what she bought ⬇️ pic.twitter.com/TmXef4aZnN
— Evan (@StockMKTNewz) June 24, 2025
This marked ARK’s fourth major Circle sale since June 16. The investment manager has now sold 1.7 million shares worth about $353 million total, representing 37% of its original 4.5 million share position.
ARK still holds 2.6 million Circle shares across three funds. The largest holding sits in ARKK, which owns 1.7 million shares worth roughly $436 million.
The selling came as Circle shares briefly hit $299 Monday. The stock has surged 620% from its $31 IPO price on June 5.
Circle’s market cap now stands at around $63.9 billion according to CompaniesMarketCap. This puts the company close to matching the $61.7 billion market value of its own USDC stablecoin.
The parallel growth highlights how Circle’s business success ties directly to USDC adoption. As the second-largest stablecoin after Tether, USDC has become crucial infrastructure for crypto trading and payments.
Competition concerns aren’t stopping some analysts from staying bullish. Despite Tuesday’s drop, Circle shares remain up sharply from their debut three weeks ago.
The regulatory clarity that initially drove the rally continues to unfold. Final passage of stablecoin legislation this summer could determine whether Circle maintains its market position or faces serious new competition.
ARK’s selling pattern suggests some institutional investors are taking profits after the massive run-up in Circle shares over the past month.
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