Robinhood's Crypto Revenue Rollercoaster: JPMorgan Warns of Q1 Decline After Late 2024 Surge

The meteoric rise of Robinhood’s crypto division in late 2024 — which saw its trading revenue skyrocket by 700% year-over-year — has hit a wall. JPMorgan analysts now project a sharp decline in Q1 2025, signaling the volatility of crypto-driven businesses in a shifting market environment.

The Q4 2024 Surge: A Flash in the Pan?

Robinhood’s crypto division became the star of its Q4 2024 earnings, contributing over one-third of its total transaction-based revenue ($358 million out of $672 million). This surge pushed the company’s overall revenue to a record $1.01 billion, up 115% year-over-year, while net income jumped tenfold. The momentum was fueled by a crypto market rally, regulatory clarity (the SEC closed its investigation into Robinhood’s crypto arm without penalties), and a 20 million+ active crypto-trading user base.

The Q1 2025 Decline: Market Sentiment Turns Sour

JPMorgan’s bearish outlook for Q1 2025 hinges on a broader “risk-off” environment. Analyst Kenneth Worthington notes that the crypto and equity markets began to weaken in late 2024, and this trend persisted into early 2025. The result:

• Crypto trading volumes fell to $52 billion in Q1, a 27% drop from Q4’s $71 billion.
• Assets under custody (AUC) declined by 5% quarter-over-quarter to $183.3 billion, though they remain 41% higher year-over-year.
• Margin and derivatives trading softened, mirroring trends at competitors like Interactive Brokers.

Even a temporary spike in retail buying activity in April 2025 (possibly linked to tariff-related news) couldn’t offset the quarter’s downward trajectory.

The Numbers Behind the Narrative

The downgrade in Robinhood’s stock price target from $45 to $44 — implying a potential 10% drop from its then-$49 price — reflects this cautious view. The analyst also highlighted February 2025 data, where crypto trading volumes fell 29% month-over-month to $14.4 billion, despite a 122% year-over-year increase. Equity trading volumes dipped 1% to $142.9 billion, further underscoring the “risk-off” mood.

Risks and Regulatory Crosscurrents

While JPMorgan’s analysis focuses on market cycles, other risks loom large:

• Regulatory uncertainty: Despite the SEC’s inaction, new rules could still crimp crypto offerings. For instance, delays in crypto ETF approvals or stricter compliance demands could limit growth.
• Competitive pressures: ProShares’ SEC-approved XRP ETFs and Stripe’s stablecoin initiatives threaten Robinhood’s dominance in the retail crypto space.
• Insider skepticism: Executives like CEO Vladimir Tenev sold millions of shares in early 2025, raising questions about confidence in the stock’s near-term prospects.

The Bigger Picture: Growth Amid Volatility

Despite the Q1 stumble, the long-term trajectory remains robust. Robinhood’s AUC has grown 58% year-over-year, and its user base continues to expand. Analysts like Compass Point and Mizuho still see opportunities in crypto staking, cross-selling to its 30 million+ brokerage users, and global infrastructure.

The $61.29 average price target (with a consensus “Moderate Buy” rating) suggests investors aren’t panicking. But JPMorgan’s caution is a reminder: crypto’s boom-and-bust cycles mean Robinhood’s stock will remain a high-volatility play.

Conclusion: A Cyclical Dip, Not a Death Spiral

Robinhood’s crypto revenue rollercoaster is a masterclass in market-driven volatility. The 700% Q4 surge was unsustainable, and the Q1 decline fits the pattern of crypto’s boom-bust cycles. Yet the fundamentals — a 41% year-over-year AUC growth, regulatory tailwinds, and untapped cross-selling opportunities — argue that this is a correction, not a collapse.

Investors should focus on the long-term growth trajectory: even with Q1’s drop, crypto remains a key revenue driver, and Robinhood’s user base is primed for expansion. The $44 price target may reflect short-term pessimism, but the company’s ability to innovate (e.g., its March Madness prediction market) and capitalize on crypto’s structural adoption could justify the $61+ average price target.

In short, Robinhood’s crypto story isn’t over — it’s just hitting a speed bump on a bumpy road.