Written by: shushu

In this "only up, never down" stablecoin craze, Circle's valuation is continuously surpassing market expectations.

CRCL closed up 9.64% on Tuesday, reaching $263.45, with a market cap exceeding USDC's total market cap for the first time, hitting $63.89 billion, a staggering 749% increase from its IPO price. This rare phenomenon of "stablecoin parent company > stablecoin itself" is becoming a symbolic milestone in the integration of crypto and traditional capital markets.

At the same time, institutions have begun to gradually realize profits. According to Ark Invest Daily data, Cathie Wood's ARK Invest reduced its holdings by 415,844 shares of CRCL on June 23, with a total value of approximately $109.5 million based on the closing price that day.

Although the reduction in holdings sends a certain cooling signal, the market remains caught in a one-sided bullish frenzy, as short-selling channels are nearly exhausted and options prices lack cost-effectiveness.

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Circle is undoubtedly the most fervent representative in the crypto stock sector since June, having risen over 500% since its IPO on June 5.

On June 18, CRCL's stock price hit an all-time high, with a market cap of $48.4 billion. According to Yahoo Finance, Circle currently has approximately 36.34 million shares outstanding, accounting for 17.94% of its total share capital (Shares outstanding: 202.55 million shares). Based on the closing price of $199.59 on the 18th, the corresponding circulating market cap is approximately $7.253 billion.

The rise in Circle's stock price has also stimulated Coinbase's stock price to rise, marking the first time since COIN's IPO that it has decoupled from the surge in cryptocurrency prices and trading volumes.

With Circle's stock price reaching new highs, institutions have begun to gradually sell for profit.

ARK Earns $96 Million, Just Profit

Reports indicate that Circle plans to issue 24 million shares, raising $624 million, corresponding to a target valuation of $6.7 billion. ARK Invest subscribed $150 million, while Larry Fink's BlackRock invested $60 million, with these two institutions collectively accounting for about 35% of this fundraising round.

On June 5, ARK Invest purchased nearly 4.5 million shares of CRCL on the first day of Circle's listing, with a total value of approximately $373 million based on the closing price.

On June 16, as CRCL's price broke through $160 to set a new historical high, Ark Invest sold a total of 342,658 shares of Circle Internet Group Inc. through its three exchange-traded funds (ETFs), with ARK Innovation ETF (ARKK) reducing 196,367 shares, ARK Next Generation Internet ETF (ARKW) reducing 92,310 shares, and ARK Fintech Innovation ETF (ARKF) reducing 53,981 shares; the total value was approximately $51.7 million.

On June 17, as CRCL's stock price rebounded and broke through $160 again, Ark Invest's three ETFs sold over 300,000 shares of CRCL, generating $44.76 million in revenue.

Despite selling over 600,000 shares, Ark Invest still holds nearly 4 million shares of Circle stock, valued at approximately $371 million, accounting for 6.13% of its ETFs. This means that based on the current stock price, ARK's two sales this week only realized profits from its current CRCL holdings.

Missing Out, Selling High, Can Crypto Traders Short Circle Now?

"Circle's market cap has risen to $40 billion, while the USDC it issues is only $60 billion." A seasoned trader expressed on social media, reflecting the complex mindset of crypto traders regarding CRCL's recent performance. The wild surge of CRCL since its listing not only mirrors the collective sentiment of the crypto market but also reveals the differences in understanding and competition among different trading groups.

Those familiar with USDC's operational logic should have been the earliest beneficiaries, but in this round of IPO frenzy, a rare split has emerged—some "held their noses and bought," while others "understood the logic but found the valuation too high," ultimately missing out on the rise. Meanwhile, more traditional stock investors, due to information barriers and narrative differences, rushed into CRCL, with bullish sentiment driving the price sky-high.

"I regret not daring to go all in on CRCL for a long time," crypto trader yuyue wrote, "Before a legitimate IPO of USDT in the US stock market (which is almost impossible) or USD1 surpassing USDC and completing an IPO (which is unlikely in the short term), Circle will firmly occupy the leading position in this narrative."

"My consistent winning record in US stocks has been defeated by Circle's stock!" Twitter user "Sweet Pear" self-deprecatingly remarked, "Ever since Circle went public, I've been thrown into chaos; the logic I used to play stocks no longer applies, and instead, I have to use the logic of trading coins, which makes it all confusing. Now, the US stock market feels like a chaotic mess to me." For Sweet Pear, the fundamentals of Circle do not support this round of price increase, yet the short-term trend cannot be explained by conventional models.

Some traders explain the short-term surge by noting that the circulating market cap is less than 18%, drawing a parallel to the initial small market cap of WLD, which again provides crypto traders with a lesson: "Fundamentals and short-term trends are two different things."

Others choose to bet on the Beta effect, with crypto KOL Taiki writing before Circle's listing: "Companies like CRCL are essentially pricing anchors for stablecoins; if it is worth $10 billion, then the valuations of ENA and MKR must be recalculated." Taiki aims to capture the spillover effect by increasing holdings in DeFi blue-chip assets. Now that CRCL has soared to a market cap of $40 billion, the performance of ENA and MKR is clearly not on par with CRCL.

Another group of people who have not participated has a simpler reason—too well-informed. Lin Jie from Deribit once bluntly advised her family not to touch CRCL, believing that "Circle's revenue structure is singular and has long been a red ocean; BlackRock's BUIDL and Trump's USD1 will squeeze their market share." Her judgment is not emotional but stems from a deep understanding of the stablecoin ecosystem. However, she also admits, "In the crypto space, knowing too much can sometimes become a burden."

Unlike crypto traders who repeatedly scrutinize valuation and fundamentals, US stock investors are more willing to listen to stories. As crypto KOL Kay stated on X, US stock traders buying CRCL see "the supreme leader's national strategy, replacing VISA, charging towards 2000," while so-called real users in the crypto space see "high compliance costs with no profits, a high risk of losses during interest rate cuts, and issuance relying on massive subsidies, with a reasonable valuation of 30-50."

Previously, Jack Zhang, co-founder and CEO of Airwallex, sparked market discussions by questioning the actual use of stablecoins on X, and he recently stated, "It's time to short Circle."

But now, is it really the time?

The narrative surrounding Circle's stock is not prepared for crypto traders. A Coinbase x Circle maxi, Chris, believes that thinking Circle is too expensive is a form of "self-indulgence" among crypto traders, "You think it's a crypto revolution in finance, but the financial industry has not only joined the crypto space but has also revolutionized it."

Some view Circle's listing as a potential signal of a bull market peak, similar to how the day of Coinbase's listing coincided with the peak of the last Bitcoin bull market in 2021. However, others disagree: "The level of this bubble is far less than in 2021; Altcoins have already been severely washed out, and BTC.D remains high."

More critically, CRCL is a traditional IPO, subject to a 180-day internal lock-up period, limiting short-term selling pressure, unlike the $COIN case where insiders could cash out directly. Many hedge funds were unable to enter on the first day of CRCL's listing and could only "chase high" in the secondary market. Some short-selling institutions are also facing extremely high annualized funding rates (over 5%), making it difficult to exert substantial pressure.

As Arthur Hayes stated: "Should you short Circle? Absolutely not. You can choose not to buy, but don't short it. Emotional premiums are the most terrifying accelerators."

Perhaps Circle's market cap is not worth believing in right now. But what it represents—a stablecoin platform supported by BlackRock, Fidelity, Visa, Coinbase, and others—has crossed the compliance red line and entered the mainstream US stock market. Its valuation does not stem from consensus in the crypto space but from the stock market's repricing of "financial technology compliance platforms."

Hayes believes Circle is severely overvalued, but the price will continue to rise because this listing marks the beginning of the current stablecoin frenzy, not the end.

With traditional payment giants yet to enter on a large scale, with USDT's IPO being unlikely, and USD1 still in a policy observation period, Circle may be the only vehicle for this narrative. "There is no real future because the distribution channels for new entrants are closed; shove this idea into your foolish head and trade this hot potato like it's a piece of crap. But don't short it; these new stocks will leave shorts bleeding."

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