Major cryptocurrencies were broadly lower on Thursday morning as a sell-off that started earlier this week after the industry failed to win a change to tax reporting rules in the US continued. But Dogecoin got a boost as trading app Robinhood said a large chunk of its revenue was due to the joke token.
Despite this, “the crypto industry's fundamentals remain quite strong”, said Mati Greenspan, CEO of Quantum Economics.
One example he gave of this was European cryptocurrency trading platform Bitpanda announcing it had raised $263bn, led by billionaire entrepreneur Peter Thiel’s Valar Ventures, with the fintech startup now valued at $4.1bn.
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Another example was the “significant headway” into the crypto market from PNC, a US financial services company, which recently partnered with Coinbase to get more involved in cryptocurrencies and is hiring for crypto-related roles.
“The cherry on the top,” he said, comes from Robinhood (HOOD), which reported second-quarter earnings, posting revenues of $565m. This more than doubled compared with the first quarter.
Crypto trading generated $233m in revenue, making up more than half of all transaction-based revenue. This increased the company's crypto revenue share from 17% in the first quarter to more than 51%.
It also said 62% of this crypto revenue came from Dogecoin (DOGE-USD). The token was up more than 1% on Thursday morning.
"The fledgling retail broker emphasised the strong interest in Dogecoin, and emphasised that if this transaction activity does not continue, it will represent a notable risk factor. Let's let that one sink in," said Greenspan.
However, Robinhood reported a loss of $501m, compared with a profit of $57.6m this time last year and its share price plunged 13% in pre-market trading “as it warned investors of a drop in trading activity in coming months”, said Naeem Aslam, chief market analyst at Ava Trade.
“This would have a negative impact on company profits. Furthermore, stock traders are unsure whether the volatile digital currencies can be long-term drivers of earnings.”
Watch: What are the risks of investing in cryptocurrency?