Did Cathie Wood Sell Circle Stock Too Soon?

Widely followed growth investor Cathie Wood added to several of her existing positions on Friday. Countering those purchases, the founder, CEO, and chief investment officer at Ark Invest only lightened one of her stakes across three of her most popular exchange-traded funds (ETFs): She sold a chunk of her shares in Circle Internet Group (NYSE: CRCL).

It was the lone sell for Ark Innovation ETF (NYSEMKT: ARKK), Wood's largest aggressive growth fund with more than $5.5 billion in assets. It was also the only sell order executed for two of her smaller ETFs.

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Why is Ark Invest selling off a piece of a position she bought into just earlier this month? Is this the right call? What exactly is Circle Internet Group? Let's tackle some of these questions.

Going in circles

Circle is a rising star in the fintech space, specializing in stablecoins, as well as providing other blockchain and crypto solutions. It's best known as the issuer of USD Coin (CRYPTO: USDC), a regulated digital currency that aims to peg itself to the U.S. dollar on a one-to-one basis.

True to its name, stablecoins are designed to remain stable in value, unlike the more volatile cryptocurrency denominations with wild swings in value. Under Circle's leadership and a partnership with Coinbase (NASDAQ: COIN), USDC's goal is to offer instant, low-cost global payments with around-the-clock liquidity.

USDC has become a giant, with $60 billion in circulation by the end of the first quarter. It's the world's second-largest stablecoin, commanding a quarter of the market. Circle is also the issuer of the euro-backed EURC stablecoin, but for now, that is a much smaller player in this growing market.

Circle turned profitable in 2023, but its once-stellar top-line growth decelerated to a modest 16% gain in 2024. There are some valuation concerns, with its market cap topping $50 billion recently, but the operating climate for digital currencies in general, and USDC in particular, is improving in 2025.

Friday wasn't the first time that Ark Invest unloaded loosened its grip on Circle stock. The same three ETFs also trimmed their share count on Monday and Tuesday of last week.

Circle was one of last week's biggest gainers, soaring 83% along the way. The biggest bullish catalyst last week was the passing of the GENIUS Act by the U.S. Senate, a bill creating a federal regulatory framework for stablecoins. Many crypto investors aren't a fan of regulatory intervention, but this is a good thing for Circle and USDC. It further validates the currency, paving the way for stablecoins including USDC to go mainstream and connect with traditional banking institutions.

Image source: Getty Images.

Good or bad timing?

Circle stock was trading lower earlier in the week than it did at the end, so one can argue that Wood left a lot of money on the table with her sales on Monday and Tuesday. The shares were trading roughly 10% higher a half hour into this new trading week, so even Friday's decision to sell may seem premature if the upticks continue.

You still can't blame Wood for considering winding down at least some of her stake to bankroll the build-out of other positions on her scorecard. She got in on the June 5 IPO, and Circle went public at $31 less than three weeks ago. It began this week as nearly an eight-bagger. Even if you prefer the starting line of $69, the price it opened at on its first day of trading, those investors have more than tripled this money.

Circle remains a big part of Ark Invest's fortunes. Even after last week's substantial selling, it's the third-largest holding across all of Wood's combined ETFs. The value of her reduced share count in Circle is still worth a lot more than it was at the time of the IPO. Besides, there's an even bigger case of seller's remorse here.

Circle's IPO was somewhat unusual: More than half of the 34 million shares offered in the prospectus came from insiders looking to cash out. They did exactly that at $31 a share.

So don't worry about Wood. She will be fine.

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Rick Munarriz has no position in any of the stocks mentioned. The Motley Fool recommends Coinbase Global. The Motley Fool has a disclosure policy.