Robinhood Posts Strong Q2, Coinbase Supports Prediction Markets
Crypto Market Update
Crypto assets saw a late-day surge yesterday, with BTC -1.12% reaching a high of almost $63k and ETH 1.32% eclipsing $2,720. They have since pared some of those gains with Bitcoin trading near $60k and Ethereum holding at $2,600. Bitcoin ETF flows were strong yesterday, totaling $195 million, whereas Ethereum flows were roughly flat, posting $2.9 million in outflows. Equities are gaining today, with the SPY 0.42% and QQQ 0.47% gaining approximately 0.70%. This week was quiet in terms of economic data releases, but all eyes will be on July PPI and CPI reports next week to provide further clarity on the state of the U.S. economy.
Robinhood Q2 Earnings
Retail trading platform Robinhood released Q2 earnings on Wednesday evening, beating top and bottom line estimates. Robinhood reported record revenues of $682 million, up 40% year-over-year. Transaction-based revenues were up 69% YoY to $327 million, which was helped by a 161% increase in crypto trading revenue to $81 million. Crypto revenues were over double that of equities-based revenue, although options were the leading category, totaling $182 million. Crypto notional trading volumes reached $21.5 billion, posting a 137% YoY increase but a 40% drop compared to Q1. After falling to approximately $14 per share on Monday amid mass sell-offs, HOOD 3.31% has rebounded strongly, gaining 29% on the week, helped by their Q2 earnings.
Coinbase Pushes Back Against Banning Prediction Markets
Earlier this week, multiple Democratic senators sent a letter to the CFTC encouraging them to finalize a proposed rule that would ban prediction markets for political events. The rationale being that political bets change the motivations behind votes, causing adverse effects on elections. Coinbase countered with its own letter to the CFTC, iterating its support for the CFTC to uphold the integrity of derivative markets but taking issue with the broad language within the proposal that would result in bans for a large number of prediction contracts without adhering to the CFTC’s historical practice of making determinations on a contract-by-contract basis. The pushback comes as prediction markets have recently grown in popularity as a way to assign probabilities to real-world events – notably election outcomes. Polymarket, a growing decentralized prediction market platform, has seen a steady increase in volume over the past few months, with cumulative volume surpassing $1 billion last month.
Technical Strategy
Despite today’s minor setback, Bitcoin managed to make good progress in rebounding this week following its success in holding July lows on the recent drawdown from late July. The ability to hold $53,550 followed by a subsequent bounce up above BTC -1.12% $60k is constructive in the short run. However, the broader pattern from March remains range-bound and requires a rally back over $70k to improve its intermediate-term outlook. Overall, I expect that there could be additional volatility and choppy trading over the next week ahead of a push higher to exceed July highs into September. One should look to buy dips in the low $50’s and sell rallies in the high $60’s until this larger trading range can be resolved.
Daily Important Metrics
All metrics as of 2024-08-09 13:42:36 All Funding rates are in bps Crypto Prices
All prices as of 2024-08-09 11:32:12 Exchange Traded Products (ETPs)
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