We recently published a list of 12 Crypto Stocks with the Biggest Upside Potential. In this article, we are going to take a look at where Robinhood Markets, Inc. (NASDAQ:HOOD) stands against other crypto stocks with the biggest upside potential.
Bitcoin Continues Its All-Time Highs
On December 16, Bitcoin reached another all-time high, soaring above $107,000 as investors anticipate an interest rate cut by the Federal Reserve later in the week. The two-day policy meeting will conclude on December 18, and investors are anticipating the Fed to lower interest rates. According to the CME FedWatch Tool forecast, there is a 96% chance of a 25-basis-point cut. This is expected to materialize as a positive trend for Bitcoin. Since Bitcoin often trades like a tech stock, it has the ground to seek benefit from lower interest rates.
In addition, lower interest rates imply a growing money supply and a weakening dollar. Both of these happenings have exhibited long-term correlations with Bitcoin. According to CNBC, Bitcoin has rallied 52% since the US presidential election and 149% for 2024. Trump’s upcoming administration is expected to have a friendly regulatory environment and potentially establish a national strategic Bitcoin reserve. This has been a powerful catalyst for Bitcoin and cryptocurrencies at large.
Bitcoin ETFs Surpass Satoshi Nakamoto’s Holdings
One of the biggest volume drivers among institutions this year has been the Bitcoin ETFs that launched in January 2024, closing out the year with a collective market cap of more than $100 billion. On December 17, Todd Ruoff of Autonomys appeared on CNBC to discuss the performance of these Bitcoin ETFs in 2024 and their potential outlook in 2025. Ruoff was of the view that the adoption trends the industry saw on the institutional level were remarkable. These trends were amplified by the supply side being reduced with Bitcoin’s halving. This, by far, exceeded expectations. Analogies are being made to gold, which it has by far surpassed. The expectation is that the acceleration is expected to continue into 2025.
The collective Bitcoin holdings for ETF issuers in the States recently surpassed Satoshi Nakamoto’s supposed holdings. US spot Bitcoin ETFs are now collectively the largest holders of Bitcoin, reflecting the idea that institutions are taking over Bitcoin. According to CNBC, the 12 spot Bitcoin ETFs in existence drove one of the most successful ETF launches in history after their January launch, collectively passing $100 billion in assets under management. These funds now hold slightly more than 1.1 million Bitcoin, which translates to nearly 5% of all the Bitcoin in existence. This number exceeds the supposed holdings of the legendary pseudonymous founder Satoshi Nakamoto, who is believed to hold as much as 1.1 million Bitcoin.
Ruoff said that Satoshi Nakamoto’s wallets have always been considered the Fort Knox of the Bitcoin industry. To see the ETFs collectively surpassing this level has been an astounding trend in the industry. Ruoff was of the view that the industry has so far benefitted from some big-name recognition, with key industry players bringing trust and credibility to the crypto world. However, with the anticipated seat change in the SEC and the expected regulatory softening, Ruoff does not believe that the regulators are ready to lay down and let anything happen in crypto. There is still considerable work that needs to be undertaken in the industry.
What is 2025 Going to Look Like for Crypto?
Looking at the 2025 outlook, Ruoff said that the large players in the crypto industry bring a great reputation to the space, giving people a perception of legitimacy and competent management for investors. In his opinion, this is going to attract the majority of investment. Smaller players are going to have difficulty competing due to various factors, such as not being able to compete with the inflows. As the market becomes overcrowded and saturated, the circumstances could lead to a consolidation. Some of the smaller underperforming ETFs will likely continue struggling to gain market share, eventually being left with no other option but to merge with another institution.
Ruoff also believed that Bitcoin had nothing to worry about in 2025. He said that while regulation might be the biggest roadblock to crypto as a currency in 2025, the industry is on the way to overcoming it with a crypto-friendly administration coming in.
Our Methodology
We first utilized stock screeners, ETFs, and online rankings to make an extended list of 30 crypto companies. We then shortlisted the top 12 stocks from our list with the highest analyst upside potential, as of December 17. The 12 crypto stocks with the biggest upside potential are arranged in ascending order of their upside potential.
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
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Robinhood Markets, Inc. (NASDAQ:HOOD)
Analyst Upside: 13.43%
Robinhood Markets, Inc. (NASDAQ:HOOD) offers an inclusive financial services platform for everyone. Its platform allows users to invest in and trade stocks, ETFs, options, and cryptocurrencies among other financial instruments. Its Robinhood Crypto, LLC segment allows commission-free cryptocurrency trading. Customers can automatically buy commission-free cryptocurrency through the platform on a schedule of their choosing. It provides crypto recurring investments, and also keeps custody of cryptocurrencies on behalf on its customers in two types of wallets: cold wallets and hot wallets. Hot wallets are managed online, whereas cold wallets operate entirely offline.
The company has three primary areas of focus: winning the active trader market, expanding internationally, and increasing wallet share with its customers. It made substantial progress in all of these areas of focus in fiscal Q3 2024. Robinhood Markets, Inc. (NASDAQ:HOOD) has strong financials in place. Fiscal Q3 2024 proved to be another profitable quarter for the company, marking its second highest revenues ever. Total revenue grew by 36% year-over-year, and adjusted EBITDA increased substantially by 96% from a year ago.
Robinhood Markets, Inc. (NASDAQ:HOOD) is continuing to increase its wallet share. Its net deposits for fiscal Q3 2024 were $10 billion or more for the third consecutive quarter. This brings the company to $34 billion year-to-date, going above its record of $31 billion in 2020. Its customer assets under custody also grew to a record high of $152 billion, reflecting its increasing market growth. The company ranks 12th on our list of the 12 crypto stocks with the biggest upside potential.
Overall, HOOD ranks 12th on our list of crypto stocks with the biggest upside potential. While we acknowledge the potential of crypto stocks, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than HOOD but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
