Blockchain analytics firm Arkham Intelligence reports that Robinhood Markets, a discount brokerage, owns one of the largest Bitcoin wallets globally. The wallet currently holds approximately $3.1 billion worth of Bitcoin on behalf of Robinhood’s customers. This significant holding likely constitutes the majority of Robinhood’s Bitcoin assets. As of June-end, Robinhood’s customers also held approximately $4.2 billion in Bitcoin, along with an additional $7.3 billion in other cryptocurrencies such as Ether and Dogecoin, according to the company’s earnings report.
Robinhood has been steadily gaining traction in the U.S. cryptocurrency trading market, making it one of the primary platforms for such transactions. This observation becomes particularly pronounced as other players like FTX US and Binance US have either withdrawn or faced challenges in the U.S. market. In fact, Robinhood managed to capture 4% of the crypto trading market share previously held by Coinbase Global during the second quarter. It appears that their market share has further increased in July, as stated in a research note by Mizuho analyst Dan Dolev earlier this month. Dolev rates Robinhood as a Buy, setting the price target at $15.
On Monday, Robinhood’s stock experienced a slight decline of approximately 0.1%, trading at a price of $10.53.
Robinhood Sees Increase in Share Amidst Rising Competition
Robinhood, the popular trading platform, attributes its growing market share to its low trading costs. CEO Vlad Tenev emphasized this point during a recent call discussing the company’s earnings. Tenev stated, “At Robinhood, you get more crypto for your dollar than most of our competitors. I believe we have done a better job in conveying this message through our user interface.”
However, the overall state of the crypto trading market has been sluggish in 2023 due to stagnant prices and decreased investor interest. In the second quarter, Robinhood reported a revenue of approximately $31 million from crypto transactions. This figure represents a decline from the $58 million earned during the same period last year. While this revenue is higher than that generated from equities-related transactions, it is only a fraction of the $127 million earned from options.
With competition heating up from brokerages like Fidelity and Interactive Brokers (IBKR), both of whom offer comparable services, Robinhood and other firms are expected to see a reduction in the fees they collect from each crypto trade they handle. However, despite these challenges, Robinhood’s prominent positioning in the crypto market during this downturn could prove advantageous if trading activity rebounds.