Crypto Surge: Experts Say Emerging Broker Robinhood Will Benefit

Last updated: 7,Dec 2023

With the market anticipating the launch of a spot Bitcoin ETF, cryptocurrencies have been soaring in recent weeks. This surge has also lifted the share price of Robinhood, a trading platform popular among retail investors. Experts believe Robinhood’s potential may even surpass that of Coinbase, the largest U.S. cryptocurrency exchange.

According to Barron’s, Robinhood disclosed in its latest filings that crypto trading activity on its platform in November jumped 75% from the previous month, compared with Coinbase’s 60% increase. In recent years, crypto has become an increasingly significant part of Robinhood’s business. Last quarter, revenue from crypto trading was only slightly below that from stock trading, suggesting Robinhood stands to benefit greatly from the current crypto rally.

On December 6, Robinhood’s stock price surged 7.03% to $11.27, bringing its gain for December to about 28% so far.

Mizuho Securities analyst Dan Dolev reiterated a “Buy” rating on Robinhood in his latest report, setting a price target of $14, and expressed confidence that the rally will continue. He believes Robinhood’s more diversified business positions it to benefit further from the launch of a spot Bitcoin ETF.

He also noted that since Binance, the world’s largest crypto exchange, has come under increased regulatory scrutiny, both Coinbase and Robinhood are likely to capture market share lost by Binance—with Robinhood enjoying an edge thanks to its pricing transparency.

In August, crypto analytics firm Arkham Intelligence reported that Robinhood holds about $3.3 billion worth of Bitcoin and $2.45 billion worth of Ethereum, making it the third-largest Bitcoin wallet holder and the fifth-largest Ethereum wallet holder globally.

Robinhood, often nicknamed the “retail investor stronghold,” is a new-generation broker especially popular among young investors. It went public on the Nasdaq Stock Exchange in July 2021.

Currently, multiple financial institutions have applied to the U.S. Securities and Exchange Commission (SEC) to launch spot Bitcoin ETFs. The market expects the SEC will approve spot Bitcoin ETF listings by spring 2024.

Experts predict that once a spot Bitcoin ETF is launched, it will attract even more capital into the crypto market. Moreover, with inflation gradually easing, markets are confident that the U.S. Federal Reserve will cut interest rates several times next year—benefiting risk assets like Bitcoin and tech stocks.

Recently, Bitcoin has surged past $44,000, while Ethereum has climbed above $2,200.