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Crypto: Robinhood adds 4 new coins to its platform including Shiba Inu, solana

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Yahoo Finance's David Hollerith explains why Robinhood is added four cryptocurrencies to its platform and the outlook for crypto on Robinhood.

Video Transcript

EMILY MCCORMICK: And speaking of retail investors, Robinhood, the trading platform popular with retail traders, is boosting its crypto offerings. The company announced a new slate of tokens available to buy, sell, and HODL. Yahoo Finance's own David Hollerith is here with the details. David, break it down for us.

DAVID HOLLERITH: So, last quarter, Robinhood earned $48 million from cryptocurrency trading. And it's been increasingly expanding its crypto approach since then. And it's been no surprise. Yesterday, the platform listed four new cryptocurrencies-- Compound, Polygon, Solana, and the meme coin, Shiba Inu. So, along with a broader sort of trend we saw during the middle of yesterday, all of these tokens saw a rise, along with Robinhood stock price.

Now, since then, or at least, as of today, everything has fallen back relatively flat, based on cryptocurrency's sort of volatility. Now, given all of this, Shiba Inu, I think I'll point out, has been faring probably the best. It's still seeing about a 13% rise, which, again, for the volatility of cryptocurrencies, is not so much. A meme coin can sort of change 13% to 15% in a day pretty normally, I would say. And Robinhood shares are up about a little bit less than 1% now.

So to add to this, Shiba Inu supporters or investors have been asking for Robinhood to add the coin to their platform for some time. On change.org, there's actually a petition for people-- that people have signed that is now showing about half a million people were asking for Robinhood to list the asset. Now, this goes to the interesting problem where, I guess, the power that cryptocurrency exchanges hold over the crypto ecosystem.

So, for context, centralized cryptocurrency exchanges like a Robinhood or a Coinbase are often the first place where cryptocurrency investors get exposure to new assets. So they hold a powerful role in that they have to decide whether or not to pick a new asset or to completely snub it. And those decisions can make or break any sort of token.

Now, interestingly, a study from the blockchain analysis firm, Chainalysis, has also found the cryptocurrency exchanges that list more assets tend to profit, tend to make more money in general. So there's an interesting sort of matrix here about weighing how many assets to list versus investor protections and the regulatory risks. And obviously, given what we saw last year with GameStop and AMC, Robinhood's situation is a little bit more tenuous and in terms of how they want to protect investors.

So they've actually, interestingly, taken a much slower pace than other crypto native exchanges to adding the assets, so much to the point that most of the criticism they get from crypto investors is that they're too slow to act. Now this is obviously a change in that in that they're adding new tokens, four new tokens, at what seems like a relatively faster clip.

But it's also an interesting point because for a lot of crypto investors, Robinhood also sort of achieved this point where if they choose to list an asset, it also gives it more credit. I spoke with a few investors who've said because these tokens have been listed on Robinhood, they will likely take them all a little bit more serious.

BRIAN SOZZI: Yeah, I'm glad you highlighted that price action in Shiba Inu there, David. It's one of the top trending ticker pages on Yahoo Finance. And the coin itself is just absolutely relatively outperforming shares of Bed, Bath & Beyond today. But I'm glad you mentioned the credibility factor. Because that now has more credibility, could you see a rotation out of Bitcoin and into Shiba, looking out over the next few weeks?

DAVID HOLLERITH: I think day traders are probably eyeing that. Again, this is an extremely volatile asset class. And it has essentially no fundamental sort of metrics that can be measured other than sort of its community support. Now, obviously, after Robinhood adds the token, it's obvious-- it's shown to have very strong community support. But again, it's a meme coin, and it's a cryptocurrency, meaning that unlike a stock that sort of trades like a meme, this has nothing supporting it.

So it does become a tricky situation where we're going to see this go up and down a lot. Some investors I spoke with have pointed out that after a listing, it's a little bit like on a major exchange for a cryptocurrency. You know, it's similar to sort of an IPO situation where you do see a pop, which is what we saw yesterday, and then a fall. So the volatility for the next couple of days will probably be tough for some investors to manage. And it might be better for them to wait and see.