Prediction markets are gaining traction as a brand new development space for Coinbase (COIN) and Robinhood (HOOD), as traders look past a weak first quarter for crypto buying and selling and give attention to future merchandise, based on 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 traits and the product roadmap,” together with newer choices equivalent to prediction markets.
Each corporations 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 shopper and institutional buying and selling volumes at $35 billion and $167 billion, each under Wall Avenue expectations. The agency additionally tasks change income under consensus. Nonetheless, El-Assal maintained an “chubby” ranking on the inventory and raised his worth goal to $250, citing enhancing sentiment and longer-term development drivers.
Robinhood faces comparable near-term strain. The analyst expects a sequential decline in buying and selling volumes resulting from softer market circumstances, together with a success to internet curiosity income from decrease charges. However the firm’s enterprise mannequin gives some cushion. Larger volatility can elevate buying and selling margins, and Cantor expects stronger yields in equities and choices to partially offset weaker exercise.
On the similar time, crypto income high quality could come beneath strain. El-Assal famous the platform’s “tiered pricing construction … earns decrease yields on massive energetic merchants … and better yields on marginal merchants,” with the latter group pulling again throughout volatility.
Regardless of these headwinds, each shares have rallied in latest 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 target now’s on what comes subsequent. For Coinbase, traders are watching regulatory developments and new enterprise strains. The corporate’s prediction markets providing, launched this 12 months, “continues to draw significant curiosity,” El-Assal mentioned.
Robinhood can be leaning into prediction markets alongside different initiatives equivalent to tokenization and personal market entry. The analyst mentioned these efforts, together with regulatory adjustments like updates to sample day buying and selling guidelines, may assist drive future development.
Cantor maintained an “chubby” ranking on Robinhood and raised its worth goal to $110.
The broader view, based on El-Assal, is that whereas present buying and selling traits stay tied to crypto worth cycles, the subsequent part of development will rely extra on product enlargement and new use circumstances.
In a while Tuesday, the New York Legal professional Common’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 at the very least the sports-related contracts usually are not swaps, and needs to be licensed and overseen by state regulators. This query is more likely to find yourself earlier than the U.S. Supreme Court docket.
