Robinhood's Claim To Fame: Allowing Dogecoin Trading

Robinhood became famous in the crypto world for offering meme coin trading to US traders, especially by allowing Dogecoin trading during the meme coin boom in 2021. Since then, the platform has become one of the most popular for trading meme coins. The amount of Dogecoin that Robinhood holds has increased so much that analysts are now concerned.

Robinhood’s Dogecoin Holdings Rival Bitcoin

Recently, Beth Kindig, a researcher and analyst at IO Fund, revealed that the concentration of Dogecoin on Robinhood was incredibly high. In a post on X (formerly Twitter), Kindig showed that this high concentration has also caused trading volumes on the exchange to correlate with decreased volatility and volumes for DOGE overall.

In a blog post, the market analyst explained that Dogecoin comprised 62% of Robinhood’s total crypto transaction volume. Interestingly, crypto transactions account for 38% of Robinhood’s total transaction revenue, meaning Dogecoin generates a large portion of the crypto transaction revenue.

At the same time, there has been an increase in DOGE transaction volume on the exchange compared to other crypto assets. For example, Dogecoin customer balances increased 122% quarter-over-quarter, while safeguarded Bitcoin assets only increased 68%.

This shows DOGE trading has become a key part of Robinhood’s business despite offering other assets. While this worked when interest peaked, the analyst doubts if this high dependency is good long-term.

Is Such High Dogecoin Concentration Good?

Given the high Dogecoin trading dependency, IO Fund questions Robinhood’s business viability in the blog post. Noting crypto trading volumes sliding monthly, it questions the durability of Robinhood’s transaction revenue growth.

Furthermore, there is uncertainty around which tokens the SEC will deem securities that Robinhood must stop trading.

However, Robinhood could continue seeing high transaction revenue if Dogecoin’s volume rises in the open market as the correlation remains high. “Doge’s recent increase correlated with increased Robinhood volumes and transaction revenues in Q1, but led to declining trading volumes and likely transaction revenue for Q2,” the post read.

Source: DOGEUSDT on Tradingview.com

Furthermore, the author’s views are for reference only and shall not constitute investment advice. Before purchasing, please ensure you fully understand and assess the products and associated risks.