Key Takeaways
- Cathie Wood’s ARK Invest acquired 287,609 shares of CRCL valued at approximately $17.8M on Wednesday
- CRCL shares have plummeted more than 38% over the last 30 days, including a 15% decline in just 48 hours
- The sharp decline followed Circle’s elimination from three Russell growth indexes on June 26
- A new competitor, Open USD, debuted this week with support from BlackRock, Visa, Mastercard, and other major players
- Despite recent turbulence, Bernstein continues to uphold a $190 price target for CRCL
Circle Internet Group (CRCL) has endured a challenging period recently. Shares of the stablecoin provider settled at $61.95 on Wednesday, representing a decline of more than 38% over the previous month. For ARK Invest, this selloff presented an attractive entry point.
The investment firm led by Cathie Wood accumulated 287,609 shares of CRCL on Wednesday, distributed across three exchange-traded funds, with a total value of approximately $17.82 million based on Wednesday’s closing price.
ARK Innovation ETF (ARKK) accounted for the bulk of the purchase with 210,343 shares. ARK Next Generation Internet ETF (ARKW) contributed 53,846 shares to the total, while ARK Fintech Innovation ETF (ARKF) acquired 23,420 shares.
This accumulation followed a particularly painful two-day stretch for CRCL shareholders. Shares tumbled 14.15% on Tuesday, then shed an additional 1.09% on Wednesday to finish at $61.95. Combined, this represented a 15% decline over just two trading sessions.
Behind the Recent Selloff
The downturn began after Circle was excluded from three Russell growth indexes during the annual Russell reconstitution on June 26. This exclusion forced index-tracking funds and passive investment vehicles to divest their CRCL holdings.
Specifically, Circle was dropped from the Russell 1000 Growth Index, Russell 3000 Growth Index, and Russell Midcap Growth Index. When passive funds are compelled to sell, the resulting pressure can significantly impact a stock’s price—and that’s exactly what happened here.
Additional competitive pressure emerged simultaneously. This week saw the introduction of Open USD (OUSD), a competing stablecoin backed by more than 140 organizations, including industry heavyweights like BlackRock, Coinbase, Ripple, Mastercard, and Visa. This development represents direct competition for Circle’s USDC stablecoin.
Circle has responded to market challenges with strategic initiatives. The firm recently unveiled a collaboration with Standard Chartered designed to enable institutional clients to mint and redeem USDC. This announcement contributed to a 4.25% premarket rally on Thursday, pushing shares to $64.58.
Bernstein Maintains Bullish Outlook
Despite the significant price deterioration, Bernstein analysts continue to support a $190 price target for CRCL. This valuation implies upside of more than 200% from Wednesday’s closing price, indicating that Wall Street analysts believe the recent selloff may have been excessive.
ARK’s strategic purchase aligns with this optimistic perspective. Wood’s investment firm has consistently accumulated positions in cryptocurrency-related companies, including Coinbase, Robinhood, and Bullish, in addition to Circle.
On the same trading day, ARK also purchased approximately 27,740 shares of Bullish (BLSH), valued at roughly $700,000.
Meanwhile, ARK continued reducing its exposure to Alibaba (BABA), offloading 79,632 shares worth approximately $7.81 million. This sale is part of a broader pattern of Alibaba divestitures totaling tens of millions of dollars in recent trading sessions.
According to Benzinga Edge rankings, CRCL’s Momentum score currently ranks in the 2nd percentile, underscoring the recent price deterioration.
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