This in and of itself doesn’t mean that Coinbase is immune to what ails Robinhood this week. If we only look at Robinhood’s crypto business, we see a problematic sequential drop in this week’s report. With Coinbase reporting on Nov. 9, it’s natural to be concerned. Let’s go over some of the reasons why the top dog in crypto should hold up considerably better than Robinhood did this week. If these allegations turn out to be true, then Dogecoin has fewer whales than previously imaged. Hence proving that more retail investors are involved in Doge and a massive sale will not blatantly decrease its price. Watkins believes the high premiums create arbitrage opportunities for sophisticated investors, courtesy of their ability to create new shares in the primary market.
- This creates a price dislocation, with ETHE being a misrepresentation of actual Ether prices.
- Bankers and traders, at the time, purchased highly-leveraged options and collateralized debt obligations that were completely out-of-sync with the underlying assets.
- Looking at the metrics, the premium shows investors are seeking massive Ethereum exposure.
- With a lot of buyers and few sellers, secondary market investors can, technically, “push” ETHE prices over the value of the underlying cryptocurrency, or ETH in this case.
However, the surge does not necessarily mean Ethereum is facing groundbreaking institutional demand, one analyst notes. The Motley Fool is a USA TODAY content partner offering financial news, analysis and commentary designed to help people take control of their financial lives. “it’s not a single person that owns the largest wallet that can do as they please. It’s Robinhood that holds it for millions of customers,” he replied in another tweet. The meme stock frenzy has been fueled by investors using online forums such as Reddit and Twitter.
Robinhood, Others Win Dismissal Of Meme Stock short Squeeze Lawsuit
By Jonathan Stempel – A U.S. judge dismissed a lawsuit accusing Robinhood Markets Inc and other brokerages of wrongly preventing retail investors from buying fast-rising “meme stocks,” triggering a sell-off. Computerized arbitrage trading, heavily seen in the U.S. ETF markets, quickly closes out any price dislocations when enough participants jump onboard. Simply put, traders start aggressively buying the underlying asset and instantaneously sell the broader index for “risk-free” profits. A “Rule 144 exemption” allows these initial investors to sell shares to the public on secondary markets after a 12-month holding period. Despite an ongoing dip in prices as of June 12, demand for an institutionally-aimed ETH product has increased multifold, with investors paying a huge premium to an institutional cryptocurrency firm for Ether exposure. The above very loosely represents a similar scenario to the 2008 financial crisis. Bankers and traders, at the time, purchased highly-leveraged options and collateralized debt obligations that were completely out-of-sync with the underlying assets. This created trading opportunities for a very short period but eventually brought a nation-wide financial bust.
With a lot of buyers and few sellers, secondary market investors can, technically, “push” ETHE prices over the value of the underlying cryptocurrency, or ETH in this case. This creates a price dislocation, with ETHE being a misrepresentation of actual Ether prices. Robinhood and Coinbase went public three months apart earlier this year, and they seem to be joined at the hip as next-gen trading platforms for young trigger-happy speculators. However, Robinhood operates as a marketplace for stocks, options, and cryptocurrency. Coinbase is laser-focused as the world’s largest cryptocurrency exchange platform. Robinhood is a jack of all trades; Coinbase is a master of one.
Dogecoin And Robinhood
Rick Munarriz owns shares of Coinbase Global, Inc., Robinhood Markets, Inc., and Voyager Digital Ltd. The Motley Fool has no position in any of the stocks mentioned. In short, Robinhood is crypto trading on training wheels. It may feel secure in some ways with safeguards for beginners, but ultimately it’s like driving through a school zone in a small town. There’s not a lot to see, and eventually you’re going to want to floor it and drive somewhere else. At the time of publishing, Dogecoin was trading at $0.21 and is down -0.43% in the day’s trade. Many traded from home because of the COVID-19 pandemic, through brokerages that had eliminated trading commissions. Frank Schirripa, a lawyer for the investors, said on Thursday they were disappointed but expected to amend their complaint in the next few weeks. Midtown, Gibraltar, 25th November, 2021 — Panther Protocol, an end-to-end privacy solution that creates privacy for DeFi and Web3 users across public blockchains, has raised over 22 million as part of their Public Sale. But Messari’s Ryan Watkins believes the premiums are being inflated due to simple economic factors, and less Ethereum fundamentals.
Testing out one of those zero-cost online trading sites and bought $25 worth of Ethereum. I’m up $.06 so far. I’d be up like $2 if I hit buy before sending the kiddo off to school. 💰
Keep an eye on Finance Gourmet for the review added to the list. https://t.co/hFCFsGxRqW
— ArcticLlama (@arcticllama) November 19, 2021
Watkins said ETHE shares are available to only “accredited” investors — individuals and businesses with a certain, usually high, net worth and income who gain access to securities and assets that the retail public doesn’t. Secondary market investors are buying ETHE, the Grayscale product that represents a certain amount of underlying ETH, at an “implied” price of $2,095. Read more about Buy ETH here. The figure is over 45 percent higher than ETH’s all-time high of $1490 in January 2018. Voyager is much smaller than Coinbase, but like the leading exchange it offers dozens of cryptocurrencies to trade with the flexibility of digital wallets. Voyager also lets users earn as much as 12% in annual interest for letting the platform borrow a user’s crypto to lend, pledge, or otherwise use the digital currency. Nearly half of the more than 60 currencies available on Voyager can earn interest this way, compared to just six on Coinbase and none at all on Robinhood. Another problem with Robinhood is that crypto never really leaves the platform operator’s hands. You can’t send the Robinhood-stored crypto somewhere else to settle up a transaction or to a different trading platform.
Reports are doing the rounds that a Dogecoin whale wallet that holds 30% of all Doge belongs to Robinhood. Dogecoin’s whale wallet addresses were always a mystery to be solved but remained a hard nut to be cracked. A Twitter user named Misha Boar has alleged that Robinhood holds 30% of all Doge for millions of people. Crypto volume for the industry was markedly lower in the third quarter, as the leading currencies were largely correcting from the second quarter’s frenzied surge. A sequential decline is a given for Coinbase, and analysts see a 23% dip in revenue from the $2.033 billion it delivered in revenue during the second quarter. Sell Litecoin This is a lot better than the 78% sequential bellyflop that Robinhood just produced. Voyager’s preliminary results for the three months ended in September found revenue clocking in between 39% and 42% sequentially lower. Coinbase should fare even better given its market leadership, but we’ll find out in two weeks. So the wallet that holds 30% of all Doge is not a whale, but Robinhood’s cold wallet holding Doge on behalf of millions of its customers. – A U.S. judge dismissed a lawsuit accusing Robinhood Markets Inc and other brokerages of wrongly preventing retail investors from buying fast-rising “meme stocks,” triggering a sell-off.
There is no flexibility when it comes to how to store cryptocurrency. There are 18.9 million monthly active users on the platform. The problem is that folks who are serious about crypto aren’t really doing it on Robinhood. The app only offers access to seven different cryptocurrency denominations. Compare that to the rapidly expanding universe on Coinbase that currently stands at 110 different digital coins. The investors said the late January trading curbs left them “no option” but to sell at plummeting prices. Looking at the metrics, the premium shows investors are seeking massive Ethereum exposure. Possible fundamental catalysts include the upcoming shift to ETH 2.0 — the protocol’s move to a staking consensus algorithm that could, theoretical, act as a passive investment for some. Securities and Exchange Commission said in a report that markets essentially worked well during the volatility.