Mutoujie CRCL made 100 million and shipped the goods. Can she short Circle now?

Author: shu, BlockBeats

Circle is undoubtedly the most fanatical representative target in the cryptocurrency stock market since June, with an increase of more than 500% since its IPO on June 5.

On June 18, CRCL's stock price hit a record high with a market value of US$48.4 billion. According to Yahoo Finance website data, Circle's current circulating shares is approximately 36.34 million shares, accounting for 17.94% of its total share capital (202.55 million shares). Based on the closing price of US$199.59 on the 18th, the corresponding circulating market value is approximately US$7.253 billion.

The rise in Circle's stock price also stimulated Coinbase's stock price to follow suit. This is the first time since COIN's IPO has broken away from the coin price and trading volume to rise sharply.

With the Circle stock price rising, institutions have also begun to sell out gradually profitably.

ARK made $96 million, just profit

According to reports, Circle plans to issue 24 million shares and raise US$624 million in financing, corresponding to a target valuation of US$6.7 billion. ARK Invest subscribed $150 million, and BlackRock led by Larry Fink invested $60 million, and the two institutions combined to capture about 35% of the fundraising round.

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

On June 16, when CRCL price exceeded $160 to hit a record high, Ark Invest sold a total of 342,658 shares of Circle Internet Group Inc. through its three trading open-end index funds, of which ARK Innovation ETF (ARKK) reduced its holdings by 196,367 shares, ARK Next Generation Internet ETF (ARKW) reduced its holdings by 92,310 shares, and ARK Fintech Innovation ETF (ARKF) reduced its holdings by 53,981 shares; the total value is approximately $51.7 million.

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

Despite selling more than 600,000 shares, Ark Invest still holds nearly 4 million Circle shares, worth approximately $371 million, accounting for 6.13% of its ETF. That is to say, at the current stock price, ARK's two sell-offs this week were just selling out the current CRCL holdings profits.

Related reading: "The Bull Market of Crypto, All in the US Stocks: Ten Days from Circle to 165 USD"

Missing the opportunity and selling it away, can people in the currency

circle short now?

"Circle's market value has risen to US$40 billion, and its USDC is only 60 billion." A senior trader's feelings on social platforms revealed the complex mentality of people in the currency circle about the trend of CRCL. The craze since CRCL went public not only reflects the collective sentiment of the crypto market, but also reveals the differences in cognition and game between different trading groups.

People in the circle who are familiar with USDC's operating logic should have been the earliest beneficiaries, but in this round of IPO market, there was a rare split - some people "buy with their noses", while others "understand the logic, but think the valuation is too expensive", and eventually missed the rise. More traditional investors rushed into CRCL directly due to information barriers and narrative differences, and bullish sentiment drove prices to soar.

"It may be a long regret for not daring to stud CRCL," crypto trader yuyue wrote. "The Circle will firmly occupy the leading position of this narrative until USDT's orthodox IPO (nearly impossible) or USD1 surpasses USDC and completes its IPO (short-term hopeless)."

"My record of winning US stocks is defeated by Circle!" Twitter user "Shenli" said self-deprecatingly, "Since Circle has been in chaos, the logic of playing stocks in the past is no longer useful, but it has to be the logic of speculating on coins. If he plays other stocks, he can't read them at all, and it will be messed up together. Now, US stocks have hit the old drivers in a random way." For Tianli, Circle's fundamentals do not support this round of gains, but the short-term trend cannot be explained by normal scale.

Some traders use the circulating market value of less than 18% as an explanation for the short-term surge, which is similar to WLD's initial small market trend, which once again gives traders in the currency circle an experience, "basics and short-term trends are two types of things."

Some people choose to bet on the beta effect. Before Circle went public, crypto KOL Taiki wrote: "Companies like CRCL are essentially the pricing anchors of stablecoins. If it is worth US$10 billion, the valuations of ENA and MKR must also be recalculated." Taiki gained spillover effects by increasing its holdings in DeFi blue chip assets. Now CRCL has soared to a market value of 40 billion, while ENA and MKR are obviously not as good as CRCL.

The reason for another type of people who have no end is simpler - they understand too much. Deribit's sister Lin once bluntly advised her family not to touch CRCL. She believed that "Circle's income structure is single, and it has long been a red ocean. BlackRock's BUIDL and Trump's USD1 will squeeze their share." Her judgment was not emotional, but was derived from a deep understanding of the stablecoin ecosystem. But she also admitted that "in the currency circle, knowing too much is sometimes a burden."

Unlike currency traders who repeatedly ponder valuation on valuations and fundamentals, U.S. stock investors are more willing to listen to stories. As KOL Kay said on X, U.S. stock traders who bought CRCL saw "the commander's national strategy, replace VISA, and rush to the sword at 2,000." What real users in the so-called currency circle saw "the compliance cost is so high that there is no profit, the interest rate cut cycle is easy to lose money, the issuance volume depends on a large amount of subsidies, and a reasonable valuation of 30-50."

Jack Zhang, co-founder and CEO of Airwallex, who previously posted on X platform to question the actual use of stablecoins, sparked market discussions, said on X platform, "It's time to short Circle."

But now, is it really the time?

Circle stock narrative is not prepared for people in the currency circle. A Coinbase x Circle maxi Chris believes that it is because people in the currency circle are too expensive. "You think it is a revolutionary finance in the currency circle, but the financial industry not only joined the currency circle, but also revolutionized the currency circle."

Some people regard Circle's listing as a potential bull market top signal, similar to the day Coinbase went public in 2021, which happened to be the high point of Bitcoin's last bull market. But some people raised objections: "This round of bubbles is far less than that in 2021. Altcoin has been severely washed away and BTC.D is still at a high level."

More importantly, CRCL is a traditional IPO, with an internal lock-up period of 180 days, and the selling pressure is limited in the short term, unlike $COIN that year, which was directly cashed out by insiders. A large number of hedge funds failed to enter the market on the first day of their listing, and could only "chase the high" in the secondary market. Some short-selling institutions are also under extremely high annualized capital fee rates (over 5%), which is difficult to form substantial pressure.

As Arthur Hayes said, "Should you short Circle? Absolutely no. You can not buy it, but don't short. The emotional premium is the most terrifying acceleration power."

Perhaps, Circle's market value is not worth believing now. But what it represents - a stablecoin platform jointly supported by BlackRock, Fidelity, Visa, Coinbase, etc., has crossed the compliance red line and entered the mainstream U.S. stock market. Its valuation does not come from the consensus in the currency circle, but from the stock market's repricing of the "fintech compliance platform".

Hayes believes Circle is seriously overvalued, but prices will continue to rise, as this listing marks the beginning, not the end of this stablecoin fanaticism.

Related reading: "Arthur Hayes: Stablecoin IPO is a "dead game", but I advise you not to short"

At a time when traditional payment giants have not yet entered the market on a large scale, USDT is unlikely to make an IPO, and USD1 is still in the policy observation period, Circle may be the only carrier of this wave of narrative. "There is no real future because the distribution channels of new entrants are closed. Put this idea into your fool's head and trade this shit like trading hot potatoes. But don't short, these new stocks will make short sellers lose all their money."