3 reasons to pick Coinbase over Robinhood

Robinhood Markets (NASDAQ: HOOD) disillusioned traders with its monetary replace this week. It fell wanting analyst expectations for the quarter, and its near-term steering wasn’t very encouraging. The market responded the way in which you’d count on, sending Robinhood inventory 10% decrease on Wednesday. Is {that a} dangerous omen for Coinbase International (NASDAQ: COIN) when it studies monetary outcomes for a similar three-month interval in two weeks?

Not so quick. Robinhood and Coinbase went public three months aside earlier this yr, and so they appear to be joined on the hip as next-gen buying and selling platforms for younger trigger-happy speculators. Nonetheless, Robinhood operates as a market for shares, choices, and cryptocurrency. Coinbase is laser-focused because the world’s largest cryptocurrency alternate platform. Robinhood is a jack of all trades; Coinbase is a grasp of 1.

This in and of itself does not imply that Coinbase is proof against what ails Robinhood this week. If we solely take a look at Robinhood’s crypto enterprise, we see a problematic sequential drop on this week’s report. The $51 million in income that Robinhood generated from cryptocurrency buying and selling was 860% forward of the place it was a yr earlier, however it was a brutal 78% quarter-over-quarter plunge from the $233 million it delivered within the second quarter of this yr. With Coinbase reporting on Nov. 9, it is pure to be involved. Let’s go over a few of the the reason why the highest canine in crypto ought to maintain up significantly higher than Robinhood did this week.

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1. Robinhood may be very restricted in crypto 

Robinhood is in style. There are 18.9 million month-to-month energetic customers on the platform. The issue is that folk who’re critical about crypto aren’t actually doing it on Robinhood. The app solely provides entry to seven completely different cryptocurrency denominations. Evaluate that to the quickly increasing universe on Coinbase that at present stands at 110 completely different digital cash.

One other drawback with Robinhood is that crypto by no means actually leaves the platform operator’s palms. There aren’t any crypto wallets. You possibly can’t ship the Robinhood-stored crypto some place else to settle up a transaction or to a distinct buying and selling platform. There isn’t any flexibility with regards to find out how to retailer cryptocurrency.

Briefly, Robinhood is crypto buying and selling on coaching wheels. It could really feel safe in some methods with safeguards for newcomers, however finally it is like driving via a faculty zone in a small city. There’s not loads to see, and finally you are going to need to flooring it and drive some place else.

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2. Shiba Inu is the brand new Dogecoin

One of many issues that set Robinhood aside within the second quarter of this yr is that it was one of many few mainstream exchanges to supply Dogecoin(CRYPTO: DOGE). The meme crypto began to take off in April, and Robinhood was floor zero for entry to the low-priced foreign money. It was a powerful tailwind for Robinhood via the second quarter. Dogecoin did not step on the Coinbase welcome mat till early June, when the quarter was almost over.

Let’s flash ahead to the third quarter. The new meme token nowadays is Shiba Inu(CRYPTO: SHIB). It is not accessible to commerce on Robinhood. It was added to Coinbase in mid-September. We’re clearly simply the final two weeks for the third quarter, however the buying and selling quantity has been understandably excessive, and it must also gas higher steering for the present quarter at Coinbase than what we noticed at Robinhood.

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3. Crypto platforms are off to a greater begin

There aren’t numerous publicly traded cryptocurrency platforms, however one in every of them already offered an early take a look at its upcoming quarterly report. Voyager Digital (OTC: VYGV.F) formally studies its monetary outcomes on Friday morning, however earlier this month it offered a preliminary take a look at how its third quarter performed out. 

Voyager is far smaller than Coinbase, however just like the main alternate it provides dozens of cryptocurrencies to commerce with the flexibleness of digital wallets. Voyager additionally lets customers earn as a lot as 12% in annual curiosity for letting the platform borrow a person’s crypto to lend, pledge, or in any other case use the digital foreign money. Practically half of the greater than 60 currencies accessible on Voyager can earn curiosity this manner, in comparison with simply six on Coinbase and none in any respect on Robinhood. It is a greater proxy for Coinbase than Robinhood.

How did Voyager fare in its newest quarter? Crypto quantity for the business was markedly decrease within the third quarter, because the main currencies had been largely correcting from the second quarter’s frenzied surge. A sequential decline is a given for Coinbase, and analysts see a 23% dip in income from the $2.033 billion it delivered in income throughout the second quarter. This can be a lot higher than the 78% sequential bellyflop that Robinhood simply produced. Voyager’s preliminary outcomes for the three months resulted in September discovered income clocking in between 39% and 42% sequentially decrease. Coinbase ought to fare even higher given its market management, however we’ll discover out in two weeks.

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Rick Munarriz owns shares of Coinbase International, Inc., Robinhood Markets, Inc., and Voyager Digital Ltd. The Motley Idiot has no place in any of the shares talked about. The Motley Idiot has a disclosure coverage.

The Motley Idiot is a USA TODAY content material associate providing monetary information, evaluation and commentary designed to assist individuals take management of their monetary lives. Its content material is produced independently of USA TODAY.