Robinhood Is Well Positioned as Investors Increasingly Prefer Crypto, Says Bernstein

A new Bernstein report highlights how U.S. brokerage Robinhood will benefit from a growing generational shift in financial preferences, with younger investors increasingly turning to crypto and blockchain-based solutions while older generations remain skeptical.

Younger investors preferring new tech isn’t exactly shocking. But it has impacted how Bernstein rates some of the publicly traded finance and tech companies it tracks. On Thursday the firm shared that FINRA data shows 48% of crypto owners are under the age of 34 and that 55% of Gen Z traders in the U.S. prefer investing in crypto.

The report specifically highlighted Robinhood, which trades on the Nasdaq under the HOOD ticker, as being well-positioned to capitalize on this trend.

That’s because approximately 65% of Robinhood’s assets under custody come from customers aged 43 and under, Bernstein analysts wrote. And earlier this year the company acquired crypto exchange Bitstamp. The acquisition will allow it to offer more crypto financial services to its users, such as staking, lending, derivatives, and more token listings.

The FINRA research indicates that younger generations find the current banking system expensive, slow, and outdated. Instead, they are drawn to decentralized finance (DeFi) and blockchain technology.

“GenZ likes their finances on-chain and not online,” the analysts write. “While banks push their digital banking platforms, GenZ finds those apps clunky and opaque.”

This preference is reflected in the growing use of stablecoins, with approximately 27 million wallets actively using them for payments every month. The report notes that close to $160 billion in U.S. dollar stablecoins are live on the blockchain, with $2.9 trillion settled quarterly.

These stablecoins offer significant advantages in cross-border payments, Bernstein noted, with users able to transfer $1,000 cross-border for less than 1 cent.

The study also highlights the growing importance of decentralized finance (DeFi) applications. Monthly unique DeFi users stand at a 6-month average of 7.7 million. And there’s evidence lots of traders prefer to do their lending and borrowing on blockchain apps. The outstanding debt on decentralized lending platform Aave stood at $6 billion as of August 2024.

The report further states that this generational divide in financial behavior is likely to shape the future of banking and investment platforms, like Robinhood.

“As Millennials and GenZ start to become a material part of household wealth, the way they manage finances would determine what the financial platforms of the future look like,” it notes.

The research also touches on the political implications of this shift—a topic that has been near and dear to Bernstein as the U.S. Presidential election approaches.

“GenZ seem to prefer politicians to support crypto with positive regulation,” the analysts wrote. “It should not surprise you when you see Trump making an appearance at a Bitcoin conference and saying all the right things to appeal to the crypto community.”

Edited by Stacy Elliott.