Cathie Wood's ARK Invest has significantly reduced its holdings in Circle, the stablecoin issuer, in a series of transactions this June. The sales, totaling approximately $146 million, come shortly after Circle's public debut on the New York Stock Exchange on June 5th. This move has drawn attention given Wood's reputation as a cryptocurrency bull and ARK's substantial initial investment in Circle.
The recent divestment occurred over a few days. On June 16th, ARK offloaded 342,658 Circle shares for $51.7 million. This was followed by another sale on June 17th of 300,108 shares, amounting to $44.7 million. Most recently, on June 20, ARK sold a further 609,175 shares of Circle, worth $121,585,238. The shares were sold across three of ARK's exchange-traded funds (ETFs): the ARK Innovation ETF (ARKK), the ARK Next Generation Internet ETF (ARKW), and the ARK Fintech Innovation ETF (ARKF).
Despite these sales, Circle remains a significant holding within ARK's portfolios. As of June 18th, ARKK held the largest CRCL position at $371 million, representing about 6.13% of its total assets. ARKW held $115 million in CRCL shares (6.05% of its assets), and ARKF held $68.6 million (approximately 6.16% of its portfolio).
ARK's initial acquisition of Circle shares was substantial. On the first day of trading, the firm acquired 4.49 million shares, valued at $373.4 million. This aggressive move underscored ARK's confidence in Circle's potential and the broader stablecoin market.
The reasons behind ARK's decision to reduce its Circle holdings are not explicitly stated, but several factors could be at play. Firstly, the sales could be driven by profit-taking. Circle's stock experienced a substantial surge following its IPO, reaching highs above $163 before slightly retracting. ARK may have chosen to capitalize on these gains by selling a portion of its holdings. Secondly, the sales could be a strategic portfolio rebalancing. ARK's ETFs have specific allocation targets, and the firm may be adjusting its positions to maintain diversification and manage risk.
While ARK has reduced its stake, analysts at ARK remain optimistic about Circle's role in the financial system. They view Circle's IPO as a positive signal of growing institutional acceptance of stablecoins. Circle's business model, which involves issuing and managing the USDC stablecoin, has benefited from the increasing demand for stablecoins in various applications, including trading, lending, and payments.
