Robinhood Markets Inc (NASDAQ:HOOD) shares are trading lower as Bitcoin (CRYPTO: BTC) slipped toward $67,000, extending a pullback that earlier drove Bitcoin below $70,000 and left many ETF buyers in the red.

Broader crypto markets are weak, with major tokens like Ethereum, XRP and Dogecoin in the red and leveraged traders facing heavy liquidations.

Here’s what investors need to know.

• Robinhood Markets shares are sliding. Why is HOOD stock dropping?

How Robinhood Makes Money On Crypto

Robinhood's app is built around frequent trading. The company offers zero-commission stock and options trades, but earns revenue behind the scenes through payment for order flow and interest on customer cash.

For crypto, Robinhood Crypto routes customer orders to trading venues and typically earns a spread or rebate on each trade rather than a visible commission, and crypto has been a meaningful slice of its transaction revenue.

The more users buy and sell Bitcoin and other coins, the more revenue Robinhood can generate.

Why HOOD Falls When Bitcoin Falls

When Bitcoin is rallying, crypto trading on Robinhood usually surges as retail traders chase momentum, lifting the company's transaction revenues.

A drop like Thursday’s, with Bitcoin near $67,000 and sentiment slipping toward fear, tends to cool speculative activity. Lower prices can also shrink average trade sizes and reduce spreads, pressuring revenue expectations.

HOOD's slide shows the stock is partly a leveraged bet on crypto trading volumes, not just the broader equity market.

Technical Indicators Signal Short-Term Weakness

The stock is currently trading 29.8% below its 20-day simple moving average (SMA) and 40% below its 100-day SMA, indicating a bearish trend. Shares have increased 37.73% over the past 12 months but are positioned closer to their 52-week lows than highs, suggesting potential weakness in the current market environment.

The RSI is at 18.42, which is considered oversold, while MACD is below its signal line, indicating bearish pressure on the stock. The combination of oversold RSI and bearish MACD suggests mixed momentum.

• Key Resistance: $78.00

Robinhood’s Business Model

Robinhood Markets is creating a modern financial services platform. It designs its own products and services and delivers them through a single, app-based cloud platform supported by proprietary technology.

Its vertically integrated platform has enabled the introduction of new products and services such as cryptocurrency trading, dividend reinvestment, fraud detection, derivatives, fractional shares, recurring investments and others.

This matters in the context of the current news as the company’s reliance on crypto trading for revenue means that fluctuations in Bitcoin prices can significantly impact its financial performance.

As the market for cryptocurrencies remains volatile, Robinhood’s growth trajectory could be at risk, making it essential for investors to monitor these developments closely.

Earnings Outlook And Analyst Optimism Come Into Focus

Investors are looking ahead to the next earnings report on Feb. 10.

• EPS Estimate: 62 cents (Up from 54 cents YoY)
• Revenue Estimate: $1.33 billion (Up from $1.01 billion YoY)
• Valuation: P/E of 33.6x (Indicates premium valuation)

Analyst Consensus & Recent Actions: The stock carries a Buy Rating with an average price target of $138.05. Recent analyst moves include:

• Needham: Buy (Maintains Target to $135.00) (Jan. 28)
• Argus Research: Initiated with Buy (Target $145.00) (Jan. 9)
• Barclays: Overweight (Lowers Target to $159.00) (Jan. 8)

Valuation Insight: While the stock trades at a premium P/E multiple, the strong consensus and rising estimates suggest analysts view the growth prospects as justification for the 83% upside to analyst targets.

Top ETF Exposure

Significance: Because HOOD carries such a heavy weight in these funds, any significant inflows or outflows for these ETFs will likely force automatic buying or selling of the stock.

HOOD Shares Slide Thursday

HOOD Price Action: Robinhood Markets shares were down 5.28% at $76.37 at the time of publication on Thursday, according to Benzinga Pro data.

The chart shows Robinhood shares have swung from being significantly overextended above their 200-day average to deeply oversold, now sitting near the lower end of their historical deviation range.

This sharp move below average signals strong downside momentum and elevated volatility, suggesting selling pressure has intensified after a period of extreme bullish positioning.

Image: Shutterstock