In the highly competitive world of digital assets, broker Robinhood Markets seems to be outperforming its crypto-focused rival Coinbase Global, according to analyst Dan Dolev at Mizuho Securities. Despite the tough times facing digital assets, Robinhood continues to attract retail traders, stealing market share from Coinbase.
Dolev's research note highlights that Coinbase lost four percentage points of market share to Robinhood in the second quarter of the year. He also mentions that both companies have acknowledged this trend in their management commentary, indicating that it is likely to continue.
The analyst suggests that one of the reasons behind this shift in market share is Coinbase's recent aggressive price increases for retail traders. Dolev speculates that these price hikes may not be sustainable in the long run, especially as Robinhood continues to gain momentum in attracting retail crypto traders.
This latest development underscores Robinhood's ability to thrive amidst tough market conditions. It will be interesting to see if Coinbase can effectively respond to this competition and regain its lost market share.
Coinbase Faces Challenges as Fees Increase
Coinbase, one of the leading crypto brokers, has recently raised its fees for retail traders, a move that may be starting to impact its business. According to Dolev, the so-called take rates from small traders have increased from 1.3% in mid-2022 to 2.2% in the second quarter. This can be seen as a response to the regulatory issues that have been affecting the entire digital asset space.
In contrast, Robinhood, another player in the market, seems to be gaining an advantage over Coinbase. Despite the current market conditions with retail investors largely staying away from Bitcoin due to its historically low volatility and trading volumes, Robinhood has managed to attract customers. This is reflected in their trading volumes in equities, options, and crypto, which have picked up compared to the second quarter monthly averages.
Interestingly, while Robinhood's stock has risen by 32% this year, Coinbase shares have surged by 136%. However, this may not be sustainable, and a correction in the market could potentially be on the horizon.
As of now, Coinbase has not responded to requests for comment.
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