Synopsis
Crypto markets have come under pressure this year, with bitcoin down more than 30% in the last six months, as a broad risk-off mood took hold, triggering waves of selling across digital assets and curbing retail trading activity.Listen to this article in summarized format
Crypto markets have come under pressure this year, with bitcoin down more than 30% in the last six months, as a broad risk-off mood took hold, triggering waves of selling across digital assets and curbing retail trading activity.
Robinhood's transaction-based revenue grew a modest 7% to $623 million in the first quarter, missing estimates of $728.2 million, according to data compiled by LSEG. Its cryptocurrency revenue came in at $134 million, down 47% from a year earlier.
Analysts at Morningstar said lucrative cryptocurrency trading represented a "particular pressure point" in the January-March period, with weakness in crypto driving a "rough" quarter for the company.
Retail investors, often referred to as mom-and-pop traders, tend to pull back during bouts of volatility as repeated swings erode confidence and lead to trading fatigue.
"Trading volumes have been choppier with signs of retail investor exhaustion and revenue capture has trended lower in options and crypto," analysts at Raymond James wrote in a note.
The crypto sector has expanded at a breakneck pace in recent years, as regulatory uncertainty has given way to a more supportive environment.
Alongside this shift, the industry has seen a growing roster of crypto-native exchanges, while traditional heavyweights such as Charles Schwab and Morgan Stanley's E*TRADE have also made inroads, intensifying competition for trading volumes.
"We expect competitive dynamics to continue to ratchet up in crypto," analysts at KBW wrote in a note, adding that volumes have weakened across the industry in April.
Robinhood has sought to reduce its reliance on trading activity in recent years, which can shift quickly with market sentiment, and has expanded into a broader financial services platform offering a wider range of products.
