Robinhood’s Stock Token Soared Ninefold in an Hour, Then Crashed—While the Real Stock Didn’t Trade
An opinion piece published by CoinDesk examined how Robinhood’s AMC stock token surged nearly ninefold while the exchange was closed on September 3, then plunged sharply within the same hour. According to the piece, the move was driven more by trading in the token market than by the real AMC stock.
According to data cited in the September 24 article, the token rose from $2.55 to $23.16 on September 3, then fell to $3.26 within the same hour. AMC stock had closed at $2.54 on the New York Stock Exchange about seven hours earlier. The jump, therefore, was not a ninefold gain in AMC stock on the exchange, but a price dislocation in a separate token that references it.
What drove the price while the exchange was closed?
According to the piece, the Uniswap pool, which handled about 95% of token trading, saw $10.5 million in volume during that hour. The author argues that demand for a memecoin priced through the AMC token also affected the stock token’s price through trading in connected pools.
According to this analysis, an instrument designed to track the cinema chain’s stock was priced under the influence of speculation independent of the company’s share performance. The piece says that sales that reversed the surge also came from token holders taking profits, and that no real AMC shares changed hands in the process.
Why didn’t the mechanism expected to close the price gap work?
Under normal conditions, intermediaries can help close price gaps by taking advantage of differences between two related markets. But according to the piece, the only participant authorized to create and redeem tokens did not mint new tokens or redeem any during the surge. The lack of infrastructure for borrowing tokens also made it harder to close the gap by shorting the overpriced token.
The fact that the main exchange where the underlying stock trades was closed also made it more difficult to obtain shares to back new tokens. The problem highlighted by the author is that, even as the tokens continued trading, the mechanisms for conversion into the underlying asset and liquidity did not function to the same extent.
By contrast, across the seven sessions between August 31 and September 9 examined in the piece, the median difference between the token’s closing price and AMC’s New York Stock Exchange closing price was 0.87%, with a high of 2.71%. These are closing-price comparisons; they do not mean that the brief surge on September 3 stayed within that range.
The piece argues that simply extending trading hours for stock tokens is not enough; price references, liquidity, and the infrastructure for converting between a token and the underlying stock all need to be developed together. This is the opinion of the author of the piece published by CoinDesk and is not presented as the publication’s official view.