In a sudden and captivating development, a previously mysterious Bitcoin (BTC) address has managed to become the third-largest holder of BTC. As reported by Cointelegraph on Aug. 22, the address in question has accumulated an impressive 118,000 BTC.
Although it has been associated with Robinhood, questions remain, as the financial giant has not yet confirmed or denied these claims. Some on-chain analysts argue that the stash actually belongs to MicroStrategy, a U.S. business intelligence and analytics software firm, which holds 152,800 BTC, per their latest filing with the U.S. Securities and Exchange Commission.
Is TradFi supplanting crypto-oriented intermediaries?
Should the 118,000 BTC owned by Robinhood be authenticated, the repercussions could reverberate across the crypto world. Historically, the most significant Bitcoin addresses have been usually associated with crypto-native exchanges. Nevertheless, Robinhood’s part as a conventional broker focused on equities and options creates an interesting precedent.
A look at Robinhood’s most recent 10-Q filing shows that they held $4.24 billion in Bitcoin. Given Bitcoin’s price was close to $30,500 on June 30, this is equivalent to approximately 139,016 BTC – a fact that aligns with the on-chain analysts’ assertions regarding Robinhood’s considerable crypto holdings.
If Robinhood is the owner of the “mystery” Bitcoin address, this makes one point very clear. Bitcoin doesn’t depend on big organizations to succeed. Analysts used to argue that for Bitcoin to really take off, more big investment firms or companies like Tesla and Block Inc. had to get involved. But those hopes faded away as recent reports from Apple and Alphabet (Google’s parent company) revealed that they hadn’t taken the Bitcoin plunge after all.
Regarding Robinhood, reports state that by June 2023, they had around 23.2 million active users. If just 10% of them owned some Bitcoin, they would need an average of about $1,828 each to reach the reported $4.24 billion in Bitcoin holdings. This demonstrates that ordinary people, like those on Robinhood, can actually play a significant role in shaping the cryptocurrency landscape.
The downside of Bitcoin being held by Robinhood
Despite some investors wanting Bitcoin to become widely used, doing so would involve certain risks. Robinhood’s user base has a reputation for investing in speculative stocks like AMC, GameStop and Bed Bath & Beyond, and they have a large amount of Dogecoin (DOGE) worth $2.63 billion.
This inclination towards short-term investments leads to questions about their attitude towards Bitcoin. If these investors bought BTC expecting U.S. spot-based ETF approval, a potential prolonged price fall or delayed approval could cause a mass sell-off.
Additionally, there is a more remote yet conceivable risk of U.S. government intervention. Although the probability of a situation similar to 1933 Executive Order 6102, which forced private gold holders to exchange their gold for paper currency, is small, potential actions by U.S. authorities could endanger these holdings.
Furthermore, the huge Bitcoin stash held by Robinhood increases the danger of such actions affecting a greater portion of the market. Surprisingly, this huge accumulation of cryptocurrency by Robinhood customers could even be beneficial for ETF applicants. The lack of investor protections on Robinhood could encourage the creation of more secure and regulated ETFs.
The emergence of Robinhood in the cryptocurrency sector highlights the ever-changing nature of the market. Even if spot Bitcoin ETFs don’t come to fruition, investors will find other ways to increase their exposure to cryptocurrency, such as through MicroStrategy shares, Robinhood, or other innovative means. This adaptability shows that in the world of finance, innovation and development are inevitable – like nature’s unstoppable drive to find a way.
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