TLDR
- Circle stock has plummeted over 55% from its June high, now trading at $131.80 amid a planned $1.4 billion secondary offering
- CEO Jeremy Allaire sold $45.5 million worth of Circle shares, raising questions about internal confidence in the company
- Coinbase fell 25% over the past month and dropped below its IPO price despite acquiring Deribit for $2.9 billion
- Crypto stocks lost momentum after a 500% surge over 18 months, with the sector now showing signs of fatigue
- Federal Reserve uncertainty and Jerome Powell’s Jackson Hole speech are creating pressure across crypto equities
Crypto stocks are experiencing a sharp correction after an 18-month rally that saw some companies gain over 500%. Two major players, Circle and Coinbase, are leading the decline as investors pull back from riskier assets.
Circle stock has fallen more than 55% from its June peak of $300. The company now trades at $131.80, down over 12% this week alone.
The drop comes as Circle announced plans for a secondary offering worth $1.4 billion. The offering includes 10 million shares, with 8 million coming from existing shareholders.
CEO Stock Sale Raises Eyebrows
Circle CEO Jeremy Allaire sold 357,812 shares for $45.5 million as part of the offering. The timing of the sale has created doubt among investors about management’s confidence in the stock.
Technical analysts point to a breakdown below key support levels. Some predict the stock could fall another 25-30% toward the $100 mark.
Despite launching the Arc Layer-1 blockchain and reporting strong second-quarter results, Circle continues to face selling pressure. The company’s USDC stablecoin remains popular, but equity investors are taking profits.
Coinbase has also struggled, falling 25% over the past month. The stock dropped below its IPO price despite completing a $2.9 billion acquisition of derivatives platform Deribit in early August.
The exchange operator fell nearly 7% this week to around $296. Trading volume has decreased as institutional enthusiasm cools.
Broader Market Pressures Weigh on Sector
The crypto stock selloff reflects broader market concerns about Federal Reserve policy. Investors are waiting for Jerome Powell’s speech at the Jackson Hole symposium this week.
Recent inflation data has reduced expectations for September interest rate cuts. Analysts now put the chances of a rate cut at 70%, down from earlier projections.
Crypto stocks typically benefit from loose monetary policy. Higher interest rates make risk assets less attractive to investors.
The 10x Research Crypto Stocks Index gained 500% over 18 months, far outpacing Bitcoin’s 117% rise. However, the index has now pulled back to 427% gains as momentum fades.
Bitcoin itself has dropped 2% to around $112,500 in recent trading. Ethereum recovered slightly to $4,300 after earlier losses.
Market analysts note the summer months typically bring weaker trading activity. Without major catalysts like new IPOs, crypto stocks may enter a consolidation period.
Circle’s failed IPO momentum and lack of new crypto public offerings have left the sector without fresh drivers. Institutional activity remains subdued compared to earlier in the year.
The recent correction has erased much of the optimism that drove crypto stocks higher. Even positive developments like the GENIUS Act passage and $100 billion in institutional adoption have failed to support prices.
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