Prediction markets are gaining traction as a brand new progress space for Coinbase (COIN) and Robinhood (HOOD), as traders look past a weak first quarter for crypto buying and selling and concentrate on future merchandise, in keeping with Cantor Fitzgerald analyst Ramsey El-Assal.
El-Assal mentioned “traders are more and more treating the quarterly print as backward-looking,” with consideration shifting to “forward-looking demand tendencies and the product roadmap,” together with newer choices similar to prediction markets.
Each firms are anticipated to report softer outcomes for the primary quarter of 2026 after a pullback in crypto costs and buying and selling exercise. Bitcoin and ether (ETH) fell about 23% and 29% within the quarter, weighing on volumes throughout exchanges. Buying and selling exercise additionally slowed because the quarter progressed, with Coinbase volumes declining from roughly $66 billion in January to $54 billion in March, based mostly on third-party information.
Cantor estimates Coinbase’s client and institutional buying and selling volumes at $35 billion and $167 billion, each under Wall Avenue expectations. The agency additionally initiatives change income under consensus. Nonetheless, El-Assal maintained an “chubby” score on the inventory and raised his worth goal to $250, citing enhancing sentiment and longer-term progress drivers.
Robinhood faces related near-term stress. The analyst expects a sequential decline in buying and selling volumes as a result of softer market situations, together with a success to internet curiosity income from decrease charges. However the firm’s enterprise mannequin presents some cushion. Greater volatility can carry buying and selling margins, and Cantor expects stronger yields in equities and choices to partially offset weaker exercise.
On the identical time, crypto income high quality might come underneath stress. El-Assal famous the platform’s “tiered pricing construction … earns decrease yields on giant lively merchants … and better yields on marginal merchants,” with the latter group pulling again throughout volatility.
Regardless of these headwinds, each shares have rallied in current weeks. Coinbase shares are up about 18% quarter-to-date, whereas Robinhood has climbed roughly 40% in April from late-March lows, helped by enhancing threat sentiment and easing geopolitical tensions.
The main focus now’s on what comes subsequent. For Coinbase, traders are watching regulatory developments and new enterprise traces. The corporate’s prediction markets providing, launched this yr, “continues to draw significant curiosity,” El-Assal mentioned.
Robinhood can be leaning into prediction markets alongside different initiatives similar to tokenization and personal market entry. The analyst mentioned these efforts, together with regulatory modifications like updates to sample day buying and selling guidelines, might assist drive future progress.
Cantor maintained an “chubby” score on Robinhood and raised its worth goal to $110.
The broader view, in keeping with El-Assal, is that whereas present buying and selling tendencies stay tied to crypto worth cycles, the following part of progress will rely extra on product enlargement and new use instances.
Afterward Tuesday, the New York Lawyer Normal’s workplace filed a lawsuit in opposition to Coinbase and fellow crypto change Gemini over their prediction market choices, alleging that the merchandise had been really playing merchandise and subsequently in violation of state rules.
Whether or not prediction markets — particularly, sports-related prediction markets — are playing merchandise usually are not is at the moment a subject of debate in each state and federal courts. The Commodity Futures Buying and selling Fee has argued that prediction markets are swaps, and subsequently correctly regulated by that company on the federal degree. States have argued that no less than the sports-related contracts usually are not swaps, and ought to be licensed and overseen by state regulators. This query is prone to find yourself earlier than the U.S. Supreme Courtroom.