Robinhood Is Playing a Risky Game With Dogecoin— Here's How

Analyst Beth Kindig says Robinhood's heavy Dogecoin holdings raise concerns over trading volume correlation, revenue impact, and potential SEC issues.
Dogecoin, Voice of Crypto

Key Insights

  • Robinhood holds a great deal of Dogecoin, which has become concerning for analysts about possible risks.

  • Analyst Beth Kindig believes there is too much of a correlation between Robinhood's trading volume and Dogecoin's volatility.

  • Dogecoin transactions make up a large portion of Robinhood's revenue, and IO Fund fears for the exchange’s sustainability.

  • In turn, Robinhood may encounter issues with the SEC, which could put Dogecoin at risk if something unfavourable happens.

Robinhood became popular mostly during the 2021 memecoin craze.

The crypto exchange capitalized on the memecoin gold rush at the time, with Elon Musk and Dogecoin and Vitalik Buterin and Shiba Inu.

So far, Robinhood has also seen itself become one of the key players for memecoin trading due to its capitalization in this sector—however, analysts are starting to raise alarms.

Does Robinhood hold too much Dogecoin?

How Much Dogecoin Is too Much?

Beth Kindig, a market researcher and analyst at IO Fund, first raised the alarms in a recent tweet.

According to the analyst, the Dogecoin concentration has become “alarming” within Robinhood’s reserves.

<div class="paragraphs"><p>Robinhood’s Dogecoin reserves</p></div>

Robinhood’s Dogecoin reserves

In a follow-up newsletter from Kinding and IO fund, this correlation has created noticeable similarities between the exchange’s trading volumes and Dogecoin and the memecoin’s overall volatility.

Kinding noted that Robinhood's MoM declines in April and May have a stark correlation to a drop in volatility and volume for $DOGE.

In sum, Robinhood just might have “too much Dogecoin”, and whatever happens to the crypto exchange—happens to Dogecoin as well, in a way.

But what does this mean for Dogecoin, for Robinhood and for investors?

Further Disturbing Stats

Further analysis by IO Fund in the newsletter, also shows that Dogecoin transactions account for around 62% of Robinhood’s total crypto transaction volume.

In fact, the platform might even have as much Dogecoin as Bitcoin.

IO Fund posits that considering how crypto transaction fees make up more than 35% of the platform’s total revenue, Dogecoin and Robinhood have far too much influence over one another.

All of the above is without mentioning how sustainable Robinhood’s business model is in the long term, especially with the ongoing decline in crypto trading volumes on a general scale.

In sum, Robinhood's capitalization on Dogeocin might turn out to be a massive handicap if the market shifts further downwards.

Robinhood is also facing trouble with the US Securities and Exchange Commission after the exchange received a Wells Notice in early May concerning some of the crypto tokens listed for exchange to customers.

This correlation between DOgecoin and Robinhood could also prove to be detrimental if crypto tokens are listed on the platform. Despite these challenges, if the regulatory scrutiny continues to worsen.

Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.

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