China and US Equity Analyst

Roger Xie

Cross Asset Strategy

<ul>
<li>The proposed bank license for stablecoin issuers will be long-term positive to crypto industry and appealing to institutional investors. This is further step for US consumer protection.</li>
<li>For crypto wallet providers, they generally experienced weaker Q3 trading activities but expected strong rebound in Q4.  Coinbase and Robinhood engagement metrics (MAU) have also reflected the greater interest.</li>
<li>The overall outlook for the crypto-ecosystem is getting better as more institutions started to see <a href="https://www.smartkarma.com/entities/bitcoin-usd" target="_blank" data-smartkarma-citation="entities:25895:1" rel="noopener">Bitcoin (XBTUSD CURNCY)</a>  as more than digital gold and a hedge on fiat inflation. </li>
</ul>


The proposed bank license for stablecoin issuers will be long-term positive to crypto industry and appealing to institutional investors. This is further step for US consumer protection.
For crypto wallet providers, they generally experienced weaker Q3 trading activities but expected strong rebound in Q4.  Coinbase and Robinhood engagement metrics (MAU) have also reflected the greater interest.
The overall outlook for the crypto-ecosystem is getting better as more institutions started to see Bitcoin (XBTUSD CURNCY)  as more than digital gold and a hedge on fiat inflation. 


Crypto: Banking License for Stablecoin Issuers and Better Crypto Trading Volume in Q4

Latest News from the World’s Leading Innovators

Granite Bay Capital

An innovation focussed investment company

Granite Bay Capital is an innovation focussed investment company with a deep focus on the companies at the leading edge of innovation across major themes such as AI, ubiquitous computing, sustainability, automation and longevity.

Thematic (Sector/Industry)

<h2>Headline Development</h2>Hertz (HTZZ) just made the largest EV purchase ever, acquiring 100k Teslas (TLSA) for a reported $4.2b - half of which will go to Uber (UBER) drivers.  On top of this, Hertz will also invest significantly in EV charging infrastructure across its global operations.

Headline DevelopmentHertz (HTZZ) just made the largest EV purchase ever, acquiring 100k Teslas (TLSA) for a reported $4.2b - half of which will go to Uber (UBER) drivers.  On top of this, Hertz will also invest significantly in EV charging infrastructure across its global operations.

<ul>
<li>Crypto trading volume has rebounded shocking 70% in October from the level in 3Q21, fueled by the first-ever regulatory approval of bitcoin future ETF and the rise of bitcoin price. Download data software Apptopia also suggested renewed interest for broad range of cryptocurrency trade app, such as <a href="https://www.smartkarma.com/entities/coinbase-global-inc" target="_blank" data-smartkarma-citation="entities:32227:1" rel="noopener">Coinbase (COIN US)</a> and <a href="https://www.smartkarma.com/entities/robinhood-markets-inc" target="_blank" data-smartkarma-citation="entities:33532:1" rel="noopener">Robinhood Markets (HOOD US)</a>. Those engagement metrics DAU and MAU have also reflected the greater interest.</li>
<li>Bitcoin price has been volatile this year. It briefly peaked at $64000 in April. Then China started to clamp down on crypto mining and transaction activities, bitcoin price was down by half from the peak in May. However, blockchain technology, by its nature, has been proven to be flexible to expand the network and relocate the computing nodes as supply/demand changes. We have observed the mining and computing power has been shifted from China to other places in the world. </li>
<li>The much-awaited bitcoin-linked ETF has received green light from US market watchdog Securities and Exchange Commission (SEC) recently. The listed funds from Proshares and Valkyrie offer investor exposure not to crypto itself but to bitcoin future. SEC has signaled that it would prefer ETFs that track bitcoin future due to easy regulation. But investors believe the ETF holding bitcoin directly will received SEC approval in next step. </li>
</ul>


Crypto trading volume has rebounded shocking 70% in October from the level in 3Q21, fueled by the first-ever regulatory approval of bitcoin future ETF and the rise of bitcoin price. Download data software Apptopia also suggested renewed interest for broad range of cryptocurrency trade app, such as Coinbase (COIN US) and Robinhood Markets (HOOD US). Those engagement metrics DAU and MAU have also reflected the greater interest.
Bitcoin price has been volatile this year. It briefly peaked at $64000 in April. Then China started to clamp down on crypto mining and transaction activities, bitcoin price was down by half from the peak in May. However, blockchain technology, by its nature, has been proven to be flexible to expand the network and relocate the computing nodes as supply/demand changes. We have observed the mining and computing power has been shifted from China to other places in the world. 
The much-awaited bitcoin-linked ETF has received green light from US market watchdog Securities and Exchange Commission (SEC) recently. The listed funds from Proshares and Valkyrie offer investor exposure not to crypto itself but to bitcoin future. SEC has signaled that it would prefer ETFs that track bitcoin future due to easy regulation. But investors believe the ETF holding bitcoin directly will received SEC approval in next step. 


Crypto: Trading Activities Rebound as Investors Rush for Inflation Hedging

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/robinhood-markets-inc" target="_blank" data-smartkarma-citation="entities:33532:1" rel="noopener">Robinhood Markets (HOOD US)</a>'s share price has been trending downwards in the past few weeks after reaching a 52 week high of $55 per share on 2 August. Robinhood's share price has declined to $40.93 per share, which is now approaching the IPO price of $38. In our view, there are two major factors including a potential ban on payment for order flow and lower trading activity that are likely to lead to lower share price in the weeks ahead. Potential Ban on Payment for Order Flow (PFOF) - All in all, there does not seem to be an overwhelming evidence to suggest that SEC will side with the status quo and not ban PFOF. Although the probability of banning PFOF may be less than maintaining the status quo, the former could involve a significant slash in Robinhood's share price.Lower Trading Activity on a QoQ Basis - As of September 2021, new downloads of <a href="https://www.barrons.com/articles/two-problems-loom-for-robinhoods-stock-51632930724" target="_blank" rel="noopener">Robinhood app</a> are estimated to be down about 78% on a QoQ basis. Daily active users are down about 40% YoY. The recent increased volatility in the global equities and cryptocurrencies markets have caused millions of retail investors in the US to become more cautious and they have not been as active in trading stocks and cryptos in the past three months as compared to 1H 2021. Given that transactions based services accounted for 80% of total revenues in 1H 2021, a decline in active trading of stocks and equities would negatively impact the company.

Robinhood Markets (HOOD US)'s share price has been trending downwards in the past few weeks after reaching a 52 week high of $55 per share on 2 August. Robinhood's share price has declined to $40.93 per share, which is now approaching the IPO price of $38. In our view, there are two major factors including a potential ban on payment for order flow and lower trading activity that are likely to lead to lower share price in the weeks ahead. Potential Ban on Payment for Order Flow (PFOF) - All in all, there does not seem to be an overwhelming evidence to suggest that SEC will side with the status quo and not ban PFOF. Although the probability of banning PFOF may be less than maintaining the status quo, the former could involve a significant slash in Robinhood's share price.Lower Trading Activity on a QoQ Basis - As of September 2021, new downloads of Robinhood app are estimated to be down about 78% on a QoQ basis. Daily active users are down about 40% YoY. The recent increased volatility in the global equities and cryptocurrencies markets have caused millions of retail investors in the US to become more cautious and they have not been as active in trading stocks and cryptos in the past three months as compared to 1H 2021. Given that transactions based services accounted for 80% of total revenues in 1H 2021, a decline in active trading of stocks and equities would negatively impact the company.

Robinhood - Impact of the Potential Ban On PFOF & Lower Trading Activity

Headline Developments SpaceX (private) has completed the world’s first all-civilian mission to space, sending four passengers into Earth’s orbit without any professionally trained astronauts.  The mission lasted 72-hours, setting off on Wednesday last week and landing (below) on Saturday, 30 miles (48 km) east of the Kennedy Space Center in Florida (from where they launched).

Headline Developments SpaceX (private) has completed the world’s first all-civilian mission to space, sending four passengers into Earth’s orbit without any professionally trained astronauts.  The mission lasted 72-hours, setting off on Wednesday last week and landing (below) on Saturday, 30 miles (48 km) east of the Kennedy Space Center in Florida (from where they launched).

United States

Robinhood Markets, Inc. operates a financial services platform. The Company offers brokerage and cash management applications such as stocks, exchange-traded funds, options, and cryptocurrency. Robinhood Markets serves clients in the United States.

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Robinhood Markets (HOOD US)

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Douglas Kim

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