Robinhood’s cryptocurrency revenue, which saw an astonishing 700% increase in the fourth quarter of 2024, is expected to experience a significant decline in the first quarter of 2025, according to a report from JPMorgan. Analyst Ken Worthington has forecasted that the online trading platform will struggle to maintain its momentum amid a slowdown in trading activity and a less favorable market sentiment.
In the fourth quarter of 2024, Robinhood’s impressive crypto trading revenue was a major contributor to a substantial rise in its overall transaction-based revenue. However, as the first quarter of 2025 unfolds, Worthington predicts a stark contrast. He estimates that Robinhood users traded approximately $52 billion in cryptocurrencies during this period, a notable drop from $71 billion the previous quarter.
Worthington attributes this downturn to a "risk-off" environment that has dampened investor enthusiasm, leading to declines in both equity and cryptocurrency markets, particularly in the latter half of the quarter. He maintains a neutral rating on Robinhood’s stock and has reduced his year-end price target from $45 to $44, indicating a potential downside of about 10% from its current price, which hovers just below $49.
The anticipated decline in trading volumes is compounded by a projected 5% decrease in Robinhood’s assets under custody (AUC), expected to fall to $183.3 billion. Despite this drop, the AUC still represents a robust 41% increase year-over-year.
While there was a surge in retail buying activity in early April, following tariff-related news from Washington, Worthington cautions that this may not be sufficient to bolster the first quarter results. He notes that a softening demand for margin and derivatives trading—trends also observed at competitor Interactive Brokers—could further impact Robinhood’s overall performance.
These developments reflect broader trends within the cryptocurrency market, which has seen a cooling off after a period of intense activity. At the end of 2024, the market was characterized by soaring prices for major cryptocurrencies like Bitcoin, which spurred increased engagement from individual investors. However, as 2025 progresses, the volatility that once drove trading enthusiasm has diminished, leading to a more cautious approach from retail investors.
The implications of Robinhood’s anticipated revenue decline extend beyond the platform itself. The company's business model, which heavily relies on the active participation of individual traders, is particularly sensitive to fluctuations in market sentiment. If volatility decreases or investor confidence wanes, Robinhood's revenue could be directly affected, raising concerns about its long-term profitability.
Moreover, the competitive landscape for cryptocurrency trading is evolving. Other platforms are increasingly offering lower fees or even free trading options, putting pressure on Robinhood to maintain its market share. As the industry matures, the pressure on Robinhood to innovate and adapt to changing consumer preferences becomes more pronounced.
Despite the challenges ahead, some analysts remain optimistic about the long-term potential of the cryptocurrency market. They argue that the fundamentals driving interest in digital assets are still strong, and as economic conditions stabilize, trading activity could rebound. Nevertheless, the short-term outlook suggests that investors should prepare for ongoing volatility and a potential decrease in trading volumes.
As Robinhood prepares to release its first quarter results after the U.S. market close on Wednesday, April 30, 2025, all eyes will be on how the company addresses these challenges and whether it can leverage its position in the evolving landscape of cryptocurrency trading.
