Coinbase, Robinhood shares are lower despite bitcoin ETF approval

Shares of Coinbase and Robinhood were lower Thursday as traders weigh how the approval of bitcoin exchange-traded funds in the U.S. could weigh on the crypto trading platforms.

Coinbase shares dropped more than 6%, while Robinhood was down by more than 3%.

On Wednesday, the Securities and Exchange Commission approved rule changes that allow for the launching of bitcoin ETFs in the U.S. The news has been long awaited by investors in the crypto space as it is seen as lending more credibility to what has been a volatile industry and asset class.

“This is a monumental step for the crypto industry,” Coinbase CEO Brian Armstrong told CNBC’s Andrew Ross Sorkin in an interview that aired Thursday. “There’s 52 million Americans who have been using crypto over the past decade, and I think they’ve been waiting for some kind of acknowledgment from the government, and the SEC in particular, that this asset class is here to stay — and they finally got that.”

There is some concern that the advent of a spot bitcoin ETF in the U.S. could put pressure on Coinbase down the road — as it offers investors an easier way to invest in the cryptocurrency.

“We see the impact of a Bitcoin ETF as having both positive and risky elements for Coinbase, but given the appreciation of Coinbase’s stock price, we see the risks as more relevant to shareholders,” JPMorgan analyst Kenneth Worthington wrote.

“On the positive side, we see Coinbase as the custodian of choice for Bitcoin ETFs, with Coinbase hired as the custodian for 8 of the 11 Bitcoin ETFs approved by the SEC in addition to its surveillance sharing agreements,” he said. “We think the approval of the Bitcoin ETFs are potentially a lose/lose situation for Coinbase as we see a Bitcoin ETF, if particularly successful, as a competitor to Coinbase.”

Coinbase is coming off a monster year, rallying 391.4% in 2023. Robinhood also soared more than 56% last year.

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