Robinhood Markets will officially join the S&P 500 index on September 22, replacing Caesars Entertainment as part of the index's quarterly rebalancing.
The inclusion decision announced by S&P Dow Jones Indices on Friday brings another cryptocurrency-related company into the most-watched stock index in the U.S., further expanding the benchmark index's exposure to the cryptocurrency sector.
"This change broadens the index's exposure and connection to the digital asset economy," Edwin Mata, co-founder and CEO of the tokenization platform Brickken, told Cointelegraph.
"While the S&P 500 index still lacks direct holdings in cryptocurrencies, Robinhood's role as a retail cryptocurrency gateway means that the index is indirectly capturing some of the growth value and liquidity of the sector," Mata added.
Robinhood joins Coinbase, which was included in the S&P 500 index in May, becoming one of the two cryptocurrency-focused companies currently included in the index. Both companies are key access points to digital assets, allowing the index and passive investors to engage with cryptocurrencies.
"Therefore, Robinhood's inclusion in the S&P 500 index indicates that cryptocurrency-related businesses are now seen as a strong pillar of the U.S. market," said Agne Linge, growth director at decentralized on-chain bank WeFi.
With Robinhood's addition to the S&P 500 index, all index funds and exchange-traded funds (ETFs) tracking this benchmark will need to include HOOD in their holdings, bringing a significant influx of passive capital to the stock. However, this may also introduce additional volatility to the index.
"Including these two stocks with exposure to cryptocurrencies adds some risk—marginal risk—to the S&P 500 index, as both stocks have high beta values: Coinbase at 2.89 and Robinhood at 2.36," Linge said.
Beta is a measure of an investment's volatility or systematic risk relative to the overall market. While a higher beta indicates greater volatility, Linge noted that this trade-off may benefit long-term index holders.
"This also provides a great exposure for ordinary people, pension funds, and certainly institutions that only buy index funds for stability, as they can now comfortably gain exposure to cryptocurrencies through one of the major foundational investment tools like the S&P 500 index," Linge added.
Meanwhile, CNBC's Jim Cramer praised Robinhood after its inclusion in the S&P 500 index, calling it a "giant" that is changing the landscape of the retail brokerage industry.
He also mentioned the company's ongoing expansion from stocks, options, and cryptocurrencies to retirement accounts and credit cards. He described the company as a rare disruptor that Wall Street underestimated but can no longer ignore. "It has emerged and is performing excellently," he said.
Related: Fintech company Eightco surges 3000% due to plans to acquire Worldcoin
Original article: “Robinhood Joins S&P 500, Expanding Cryptocurrency Coverage for Index Investors”
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