Robinhood Is Nicely Positioned as Traders More and more Want Crypto, Says Bernstein

A brand new Bernstein report highlights how U.S. brokerage Robinhood will profit from a rising generational shift in monetary preferences, with youthful traders more and more turning to crypto and blockchain-based options whereas older generations stay skeptical.

Youthful traders preferring new tech isn’t precisely surprising. Nevertheless it has impacted how Bernstein charges among the publicly traded finance and tech corporations it tracks. On Thursday the agency shared that FINRA information reveals 48% of crypto homeowners are beneath the age of 34 and that 55% of Gen Z merchants within the U.S. desire investing in crypto.

The report particularly highlighted Robinhood, which trades on the Nasdaq beneath the HOOD ticker, as being well-positioned to capitalize on this pattern.

That’s as a result of roughly 65% of Robinhood’s property beneath custody come from prospects aged 43 and beneath, Bernstein analysts wrote. And earlier this yr the corporate acquired crypto trade Bitstamp. The acquisition will permit it to supply extra crypto monetary providers to its customers, reminiscent of staking, lending, derivatives, and extra token listings.

The FINRA analysis signifies that youthful generations discover the present banking system costly, gradual, and outdated. As a substitute, they’re drawn to decentralized finance (DeFi) and blockchain know-how.

“GenZ likes their finances on-chain and not online,” the analysts write. “While banks push their digital banking platforms, GenZ finds those apps clunky and opaque.”

This choice is mirrored within the rising use of stablecoins, with roughly 27 million wallets actively utilizing them for funds each month. The report notes that near $160 billion in U.S. greenback stablecoins are reside on the blockchain, with $2.9 trillion settled quarterly.

These stablecoins provide vital benefits in cross-border funds, Bernstein famous, with customers capable of switch $1,000 cross-border for lower than 1 cent.

The examine additionally highlights the rising significance of decentralized finance (DeFi) purposes. Month-to-month distinctive DeFi customers stand at a 6-month common of seven.7 million. And there’s proof a number of merchants desire to do their lending and borrowing on blockchain apps. The excellent debt on decentralized lending platform Aave stood at $6 billion as of August 2024.

The report additional states that this generational divide in monetary conduct is more likely to form the way forward for banking and funding platforms, like Robinhood.

“As Millennials and GenZ start to become a material part of household wealth, the way they manage finances would determine what the financial platforms of the future look like,” it notes.

The analysis additionally touches on the political implications of this shift—a subject that has been close to and pricey to Bernstein because the U.S. Presidential election approaches.

“GenZ seem to prefer politicians to support crypto with positive regulation,” the analysts wrote. “It should not surprise you when you see Trump making an appearance at a Bitcoin conference and saying all the right things to appeal to the crypto community.”

Edited by Stacy Elliott.