Robinhood shares fell hard on Monday. The stock dropped over 10%. It was the worst performer in the S&P 500 for the day.

The fall came as crypto markets collapsed. At the same time, activity in Robinhood’s prediction markets slowed down.

Robinhood had a strong run earlier. The stock jumped 188% in 2025. Now it is down about 40% from its October high of $153.

Investors are being reminded of a key risk. Robinhood moves with retail trading mood. It also moves closely with crypto prices.

The sell-off picked up speed during the session. Trading volume was about 40% higher than normal. Sellers clearly dominated.

Bitcoin’s sharp drop over the weekend added pressure. The price fell from $83,800 on Friday to about $74,570. That was a nine month low.

More than $200 billion was wiped out from the crypto market. Around $2 billion in leveraged positions were liquidated.

This directly hurt Robinhood. Crypto trading has become a major part of its business.

In 2025, crypto transaction revenue jumped 200%. It reached about $268 million per quarter. Crypto now makes up around 40% of Robinhood’s transaction revenue.

The stock is very sensitive to market swings. Robinhood has a beta of 2.45. This means it moves more than twice as much as the broader market.

In simple terms, the stock acts like a bet on risk taking. It is not just about company fundamentals.

Analysts at Piper Sandler pointed out near term risks. These include weaker crypto trading and falling prediction market activity.

Prediction markets grew fast last year. Robinhood launched football contracts in August 2025. They became the fastest growing segment.

The CEO said growth was strong. In October alone, 2.5 billion contracts were traded. But football season ends in February.

Robinhood hopes NBA and MLB markets will help. Still, gaps between seasons often hurt revenue in fintech businesses.

Valuation is another concern. After the big rally, the stock still looks expensive.

Robinhood trades at a forward price to earnings ratio of 44. Its price to sales ratio is 23. Both are well above normal levels.

Many large investors are now locking in profits. With no clear short term drivers, selling pressure could continue.

Recent data shows trading activity is slowing. Equity trading fell 37%. Options dropped 28%. Crypto volumes were down 12%.

Customer growth is also easing. On top of that, a regulatory order from Connecticut has added uncertainty.

Robinhood reports earnings on February 10 after market close. Revenue is expected to reach $1.34 billion. That would be up 32% from last year.

Earnings per share are expected to fall to $0.63. That would be down 38% as costs rise.

If guidance disappoints, the stock could fall further. Key support sits near $85. Resistance is around $105.