Circle shares tank over 6% on Tuesday: analyst advises caution

Shares of Circle Internet Group Inc. (NYSE: CRCL) were trading lower on Tuesday, shedding over 6% despite a broader market rebound following the de-escalation of hostilities between Israel and Iran.

The dip comes after a strong rally that propelled Circle’s market cap beyond $50 billion, just weeks after its debut on the New York Stock Exchange.

The company — best known as the issuer of the USDC stablecoin — has been one of Wall Street’s most closely watched new listings, with its stock price surging on the back of regulatory tailwinds, strong earnings, and the renewed momentum in digital asset markets.

But a series of share sales by ARK Invest appears to be triggering some caution among investors.

The fuel behind CRCL stock's massive rally

The recent gains in Circle’s share price have been fueled by the passage of the GENIUS Act, a landmark bill offering regulatory clarity for stablecoin issuers.

The legislation, approved by the US Senate, is seen as a foundational step in integrating stablecoins more fully into the financial system, a development that has benefited Circle as the largest regulated issuer in the space.

Beyond regulation, Circle’s fundamentals have also supported the rally.

The company reported a 33% increase in quarterly net income, reaching $64.79 million.

The results have helped solidify investor confidence in Circle’s scalability and operational efficiency amid growing adoption of USDC across blockchain networks and financial platforms.

Cathie Wood's ARK Invest continues to sell Circle shares

Despite Circle’s upward trajectory, Cathie Wood’s ARK Invest has been steadily reducing its stake in the company.

The asset manager sold another 415,844 shares on Monday for approximately $109.6 million, marking its fourth divestment since it began selling Circle stock on June 16.

This follows a sale of 1.25 million shares last week valued at around $243 million.

ARK had initially purchased 4.5 million shares during Circle’s listing on June 5.

With the latest transactions, it has now offloaded about 1.7 million shares, or 37% of that original position.

The firm’s three funds currently hold a combined 2.6 million shares, worth $69.9 million based on Monday’s CRCL closing price of $263.40.

Analyst remains cautious on CRCL stock

Compass Point on Tuesday initiated coverage of Circle with a “neutral” rating and a $205 price target, citing concerns over intensifying competition and margin pressures in the stablecoin infrastructure space.

"With CRCL trading at over 100x EBITDA, it's clear investors aren’t valuing the stock on near-term earnings," the firm noted. "However, given the threat of new entrants and declining gross margins, we initiate with a Neutral rating."

While Circle benefits from major crypto exchange partnerships with Coinbase (NASDAQ: COIN) and Binance, Compass Point pointed out that these platforms lack the consumer reach of traditional financial institutions or retail payment providers.

That gap could limit Circle’s growth unless it can secure new distribution avenues to bring USDC into broader use cases, such as retail payments or enterprise finance.