Where did the idea come from that drawing a perfect circle freehand is a sign of genius?

Might be:

Giotto was a Florentine painter, architect and sculpture of immense talent. As the artist who first broke free from the constraints of medieval and byzantine art, he's considered the first genius of the Italian renaissance.

At the start of the 14th century, word of Giotto's mastery reached Pope Benedict XI in Lombardy. The Pope sent a courtier to Florence to see who this Giotto was, with a view to commissioning some paintings for Saint Peter's Basilica in the Vatican. The courtier first travelled to Siena to collect designs from other masters. He then went to Giotto's studio in Florence and asked for a drawing to take back to the Pope. Giotto took a canvas, dipped his brush in red paint, pinned his arm to his side and drew a perfect circle with his hand. He grinned and said "Here's your drawing". The courtier, feeling mocked, asked for another drawing. Giotto replied "This is enough, and more than enough." Although he suspected that he was being taken for a ride, the courtier took Giotto's drawing back to the Pope along with the other masters' drawings. The courtier explained how Giotto had drawn the circle unaided, and the Pope and his advisers realised just how much Giotto surpassed all the other painters of the era. Giotto got the job.

https://businessofsoftware.org/2008/02/the-perfect-cir/