Broker Robinhood has announced that 9.5 million users traded on its brokerage platform in the first quarter of this year thanks to an overall increasing bullish momentum and the GameStop short squeeze that happened just recently. The figure shows a 458% rise from 1.7 million recorded in the fourth quarter of 2020.
In a blog post, the popular brokerage service attributed the spike to the increasing popularity of the crypto market as the global market capitalization of all cryptocurrencies has risen by 100%, from 1 trillion to 2 trillion.The post further noted that the Robinhood online exchange founders are intrigued by blockchain tech and have been yearning for a transparent and decentralized widely accepted financial system that grants everybody equal access to financial services.
Many factors contributed to Robinhood’s growth
Although it’s quite right to say that the progress of popular brokerages such as Robinhood is a reflection of what is happening in the overall crypto market, there are possible factors that contributed to Robinhood’s growth that its owners have not yet mentioned. In January, Reddit stock traders gathered under the Subreddit tagged WallStreetBets pumped up the prices of dying brands such as Blackberry, AMC, and GameStop.
Their collective action prompted Robinhood to place a temporary ban on the trading of the said stocks. The ban led some of the traders to shift their focus on the crypto market. They collectively pumped up Dogecoin’s price, which was also assisted by Elon Musk’s tweets series to promote the coin.At Last, Robinhood Placed a temporary restriction on crypto trading.
Robinhood has now been slammed with various lawsuits by its customers, accusing it of trade restricting trades and manipulating the market. The firm was charged at Chicago and Manhattan courts. Meanwhile, GameStop has witnessed a 400% surge in its price following Redditors’ organized plan to avenge the alleged injustice that Robinhood meted against GameStop
Reps. Tlaib and Ocasio called for a hearing on the Robinhood’s case
Some hedge funds contributed about $3 billion for their fellow hedge fund, Melvin Capital after the latter exited its GameStop short trades. In January, Robinhood prevented traders from buying further GameStop stock, a move which shot its price to the high of $400 before crashing.
According to the Manhattan lawsuit, Robinhood deliberately locked the stock known as ‘GME’ and removed it from its trading platform amid a rise in the price of the stock, thereby preventing retail investors from making money from the rise; an act tantamount to market manipulation according to Rep. Rashida Tlaib.
Tlaib referred to Robinhood’s act as absurd, and suggested that congress hold a public hearing on the issue. According to Tlaib, Robinhood was protecting hedge funds and those who have turned the stock exchange into a “casino” and squandering millions. In the same vein, Representative Alexandria Ocasio noted that the public need to know more about the circumstances surrounding Robinhood’s blockage of trading against retail investors but allowed hedge funds to trade the same stock.
He agreed to Tlaib’s position that suggested a hearing be done to unravel the matter. Robinhood, founded in 2015, has witnessed rapid growth in the fintech industry. The Robinhood app serves as a platform for trading stocks, such as Bitcoin, Ethereum, Dogecoin, and a lot more.