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Robinhood Markets Inc (NASDAQ:HOOD) shares are trading higher Tuesday afternoon, climbing nearly 2.20% to $125.95 as a sharp recovery in the cryptocurrency market fuels investor optimism. Here’s what investors need to know.
What To Know: Tuesday’s move marks a reversal from Monday's pressure, mirroring Bitcoin's (CRYPTO: BTC) surge of over 5% to reclaim the $91,000 level.
The correlation between Robinhood's stock performance and digital asset prices highlights the market's view of the brokerage as a leveraged proxy for crypto sentiment, where a rally in major tokens triggers a cascade of financial benefits for the platform.
The rising crypto market acts as a powerful catalyst for Robinhood by simultaneously boosting multiple revenue streams. As token prices escalate, they typically trigger a fear of missing out among retail traders, resulting in a spike in transaction volumes and immediate fee generation.
Additionally, higher crypto valuations inflate the total value of assets under custody on the platform. This expansion in asset value increases the collateral available for customers to use in margin trading, which directly drives up the net interest income Robinhood earns on lending balances.
Supported by recent bullish analyst coverage regarding its new prediction market venture, this crypto-driven flywheel of increased engagement and lending capacity has firmly pushed the stock back into the green on Tuesday.
Benzinga Edge Rankings: Underscoring this aggressive market behavior, Benzinga Edge currently assigns the stock a massive Momentum score of 96.96, one of four critical metrics used to gauge the strength of a potential breakout.
HOOD Price Action: Robinhood Markets shares were up 2.20% at $125.95 at the time of publication on Tuesday, according to Benzinga Pro data.
Currently, the stock is trading approximately 3.5% below its 50-day moving average, suggesting that it may be experiencing short-term pressure.
The 52-week range for HOOD has been quite broad, spanning from $29.66 to $153.86. This wide range highlights the stock’s volatility and the potential for significant price swings, which can be both an opportunity and a risk for traders.
Read Also: MongoDB, Boeing Rally, Bitcoin Tops $90,000: What’s Moving Markets Tuesday?
By now, you're likely curious about how to participate in the market for Robinhood Markets — be it to purchase shares, or even attempt to bet against the company.
Buying shares is typically done through a brokerage account. You can find a list of possible trading platforms here. Many will allow you to buy “fractional shares,” which allows you to own portions of stock without buying an entire share.
In the case of Robinhood Markets, which traded at $128.37 at some point on Tuesday, $100 would buy you 0.78 shares of stock.
If you're looking to bet against a company, the process is more complex. You'll need access to an options trading platform or a broker who will allow you to “go short” a share of stock by lending you the shares to sell. The process of shorting a stock can be found at this resource. Otherwise, if your broker allows you to trade options, you can either buy a put option or sell a call option at a strike price above where shares are currently trading — either way, it allows you to profit from the share price decline.
Image: Shutterstock
