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Cathie Wood's ARK Invest Sells Off Circle Shares Amidst Market Volatility and Legislative Wins

Cathie Wood's ARK Invest Sells Off Circle Shares Amidst Market Volatility and Legislative Wins

Cathie Wood's ARK Investment Management has been actively selling off its shares in Circle, the issuer of the USDC stablecoin, amidst significant market fluctuations. These divestments, totaling hundreds of millions of dollars, occurred as Circle's stock experienced substantial gains and losses, and coincided with key legislative developments in the stablecoin sector.

ARK's Strategic Divestment of Circle Shares

ARK Invest has engaged in a series of significant sales of Circle (CRCL) shares from its various funds. This strategic move comes as CRCL stock has seen considerable volatility, including a remarkable surge following its public debut.

  • Recent Sales Overview:
    • On Friday, June 20, ARK offloaded 609,175 Circle shares across its three funds for $146.2 million. This sale occurred during a 20.4% jump in Circle's shares, which closed at $240.3.
    • Earlier in the week, on Tuesday, ARK sold 300,108 shares for $44.7 million. This followed another $52 million sale on Monday.
    • In total, ARK has sold approximately 1.25 million CRCL shares over the past week, netting roughly $243 million.

Impact on ARK's Portfolio and Circle's Market Position

Despite the substantial sales, ARK Invest remains a significant holder of Circle shares, underscoring its continued belief in the company's long-term potential.

  • Key Figures:
    • The recent sales represent nearly 29% of the 4.49 million CRCL shares ARK purchased at Circle's public launch on June 5.
    • As of June 20, ARK still holds $750.4 million worth of Circle shares.
    • Circle has become the top holding in ARK's Next Generation Internet ETF (ARKW), accounting for 7.8% of the fund's weight.

Legislative Context and Market Reaction

ARK's divestment strategy has unfolded against a backdrop of significant legislative developments, particularly the passage of the GENIUS Act.

  • The GENIUS Act:
    • The U.S. Senate's bipartisan passage of the GENIUS Act, designed to regulate stablecoin issuers like Circle, is seen as a major win for the crypto industry.
    • Circle CEO Jeremy Allaire welcomed the legislation, calling it a "genius" piece of policy.
  • Market Dynamics:
    • The sales on Tuesday coincided with a 1.3% drop in Circle's stock, despite the positive news from the Senate regarding stablecoin regulation.
    • ARK has also been observed increasing its positions in chip designers like AMD and Taiwan Semiconductor, indicating a potential reallocation of capital.

Key Takeaways

  • Cathie Wood's ARK Invest has been systematically reducing its stake in Circle, capitalizing on the stock's recent surge.
  • Despite the sales, ARK remains a top investor in Circle, maintaining a substantial holding.
  • The divestments occurred amidst significant market movements for Circle and the passage of the GENIUS Act, a key stablecoin regulation bill.
  • ARK's portfolio adjustments suggest a strategic rebalancing, with increased investments in other tech sectors.

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