CRCL Stock’s 20% Drop Was A ‘Shoot First, Ask Questions Later’ Reaction, Says Clear Street

• Circle Internet rebounded in pre-market trading on Wednesday after Clear Street said the decline was driven by headline-driven reactions.
• The firm maintained a $152 price target, stating that its core thesis on stablecoin adoption and use cases, such as cross-border payments and tokenization, remains unchanged.
• Cathie Wood’s ARK Invest bought 161,513 shares worth about $16.3 million during the dip on Tuesday. 

Clear Street said that Circle Internet's (CRCL) drop of around 20% on Tuesday looked like a "shoot first, ask questions later" reaction to headlines about "banning stablecoin yield" in the amended CLARITY Act draft. 

The analyst, however, said the move is "overdone," as per a note cited by TheFly. The firm's main argument for stablecoin adoption, which includes tokenization, prediction markets, agentic AI payments, 24/7 market structure, collateral mobility, and cross-border payments, still stands. The analyst kept a ‘Buy’ rating and $152 price target on Circle shares. Clear Street also mentioned that Tether (USDT) was likely looking to expand in the U.S., after it hired a Big Four firm for its full audit. 

Circle stock gained over 4% in pre-market hours on Wednesday. On Stocktwits, the retail sentiment around Circle improved to ‘bullish’ from ‘bearish’, while chatter levels around it moved to ‘extremely high’ from ‘low’ over the past day. 

Shares of Circle dropped after a draft proposal limiting the stablecoin's yield was announced on Tuesday. The most recent change to the Digital Asset Market Clarity Act would prevent platforms from offering yield on stablecoins, including any method deemed economically or functionally similar to an interest. This has raised concerns about potential limits on adoption and revenue models for Circle and Coinbase (COIN), both of which derive revenue from yields on their stablecoin USD Coin (USDC).

COIN’s stock also rose over 2% in pre-market trade on Wednesday. On Stocktwits, retail sentiment around the cryptocurrency exchange improved to ‘bearish’ from ‘extremely bearish’, with chatter levels moving from ‘normal’ to ‘high’ over the past day.

ARK Invest Bought The Dip

On Tuesday, after hours, Cathie Wood's ARK Investment Management purchased 161,513 shares of Circle across three exchange-traded funds, including Ark Innovation ETF (ARKK), Ark Next Generation Internet ETF (ARKW), and Ark Blockchain and Innovation ETF (ARKF), for approximately $16.3 million. Based on Tuesday's closing price, ARK's position reflected an unrealized gain of around $440,000.

Read also: BMNR, IREN, WULF And Other Crypto Mining Stocks Gain Pre-Market While Bitcoin Holds Above $71K

For updates and corrections, email newsroom[at]stocktwits[dot]com.