The pixel wasn't the only thing that faded. In eToro's Q2 2024 report, the retail crypto trading volume dropped 73% year-over-year to 1.4 million monthly trades. The average investment per trade halved to $182. If you only read the headlines, you'd think this is another tombstone for crypto retail. But here's the kicker: eToro's overall net contribution rose 9% to $229 million, and GAAP net income jumped 77% to $53 million. The company didn't just survive — it thrived, while its crypto arm looked like a ghost. How? The answer lies in a dual acquisition strategy that most analysts are misreading as a retreat. It's not a retreat. It's a repositioning bathed in cold, hard cash.
Context: eToro is not a crypto company. It's a multi-asset social trading platform that happens to offer crypto. Founded in 2007, it rode the 2017 ICO wave and the 2020 DeFi explosion, but its core differentiator has always been CopyTrading — letting users mirror the portfolios of top traders. By 2024, eToro held $1.2 billion in cash and equivalents, had attempted a SPAC merger in 2021, and was quietly building a bridge to traditional finance. The crypto side? It was never the profit center. The real money came from derivatives, staking, and blockchain rewards. In Q2, crypto spot trading generated $1.346 billion in gross revenue but cost $1.354 billion to execute — a net loss of $8 million on spot alone. The entire crypto net contribution of $12.5 million came from a $19.7 million derivatives net income, with staking and rewards adding more off-balance. The spot business was bleeding.
Core: The numbers tell a story of structural dependency. eToro's crypto business is a tale of two halves: the retail-facing spot trading that everyone knows, and the institutional-grade derivatives and staking that actually pay the bills. The spot business has a negative gross margin (-0.6%), meaning every dollar of spot trade cost more than it earned. The only reason crypto as a whole is profitable is because of derivatives — a segment that is less visible to the average user. This is a fragile structure. If the derivatives market sours, the entire crypto unit could flip to a net loss. And the management knows it. That's why they are not doubling down on crypto; they are hedging.
In April 2024, eToro acquired Zengo, a self-custody wallet using MPC (multi-party computation) technology. Zengo eliminates seed phrases and targets the Web3-native user. Then in August, eToro announced the acquisition of TradeZero, a U.S. broker-dealer specializing in active stock traders, with $80 million in trailing twelve-month revenue. The trade is expected to close by H1 2027, pending FINRA and SEC approvals. The combined price tag was not disclosed, but eToro paid with cash and stock. The rationale: TradeZero gives eToro a licensed broker-dealer infrastructure in the U.S., a community of active traders who love short selling and leverage, and a faster path to launch new products like options and stock lending. The acquisition is not a reaction to crypto's decline — it's a deliberate expansion of the multi-asset thesis. The crypto decline just accelerates the timeline.
The community didn't just disappear; it moved to stocks. The data shows that eToro's stock trading helped offset the crypto weakness. The average crypto trade size halved, but the number of active stock traders may have increased. The company's total net contribution rose 9%, implying that the stock side grew faster than crypto shrank. This is not a crypto-specific signal — it's a retail sentiment signal. When the average Joe cuts his crypto bet from $364 to $182 per trade, he's not leaving the market; he's reallocating to equities. The eToro numbers are a microcosm of the broader retail flow: money is rotating from crypto back to traditional stocks, especially in the U.S. post-ETF approval. Bitcoin is now a Wall Street toy, and the retail crypto trader is a shrinking species.
Contrarian: The mainstream narrative is wrong. Most headlines say "eToro abandons crypto for stocks." But the analysis reveals a more nuanced strategy. eToro is not abandoning crypto; it's using the bear market to acquire crypto infrastructure (Zengo) at a discount while simultaneously expanding its traditional market reach. This is a classic "offense in the bear" move — build the infrastructure when the hype is low. The Zengo acquisition gives eToro a self-custody solution that can serve as a regulatory escape hatch: if U.S. SEC pressure on crypto trading intensifies, eToro can route users to Zengo's non-custodial wallet, which is not subject to the same securities custody rules. TradeZero provides the regulated U.S. broker-dealer license, allowing eToro to serve American stock traders without exposing its crypto business to SEC scrutiny. The two acquisitions are not contradictory; they are two legs of the same strategy: own the regulated broker-dealer pipe for traditional assets, and own the self-custody wallet for crypto assets. The crypto business becomes a satellite, not the core.
The crypto business didn't depreciate; it just got redefined. The data shows that eToro's crypto unit now contributes only about 5.5% of total net contribution ($12.5M out of $229M). This is a structural shift, not a temporary one. If the crypto volume continues to decline, eToro could easily spin off or shrink the spot business, keeping only the profitable derivatives and staking. The acquisition of TradeZero with a 2027 close date implies that eToro expects the U.S. crypto regulatory landscape to remain hostile for at least the next two years. By the time the deal closes, crypto might be a footnote in eToro's revenue mix. The message to the industry: the retail crypto trader is a dying breed, and platforms that don't diversify will die with it.
Takeaway: Watch the flow, not the narrative. The eToro case is a leading indicator for the entire crypto retail market. When a multi-asset platform with 35 million users sees its crypto volume drop 73% and its average trade size halve, the signal is not noise. It's a trend. Retail money is rotating into stocks, and it may not come back in the same form. The next wave of crypto adoption will likely come from institutional products, not from the retail speculator who once bought $364 worth of Bitcoin. eToro's pivot is a survival strategy. The question is: how many other crypto-first platforms will follow? The pixel wasn't the only thing that faded. The retail dream of crypto as a payment system has faded too. What remains is a financialized asset that Wall Street controls. The community didn't just disappear; it moved to where the liquidity is. And today, liquidity is in stocks. The takeaway is not that crypto is dead, but that the retail funnel is narrowing. The next bull run will be different: fewer people, more money, and less noise. eToro has already positioned itself for that world. Have you?
