Prediction markets are gaining traction as a new area of growth for Coinbase (COIN) and Robinhood (HOOD), as investors look beyond a weak first quarter for cryptocurrency trading and focus on future products, according to Cantor Fitzgerald analyst Ramsey El-Assal.
El-Assal said that “investors are increasingly treating the quarterly release as retrospective,” with the focus on “forward-looking demand trends and the product roadmap,” including newer offerings like prediction markets.
Both companies are expected to report weaker results for the first quarter of 2026 after a pullback in cryptocurrency prices and trading activity. bitcoin and ether (ETH) fell around 23% and 29% in the quarter, affecting volumes across all exchanges. Trading activity also slowed as the quarter progressed, with Coinbase volumes declining from about $66 billion in January to $54 billion in March, according to third-party data.
Cantor estimates Coinbase’s institutional and consumer trading volumes at $35 billion and $167 billion, both below Wall Street expectations. The firm also projects foreign exchange income below consensus. Still, El-Assal maintained an “overweight” rating on the stock and raised its price target to $250, citing improving sentiment and longer-term growth drivers.
Robinhood faces similar near-term pressure. The analyst expects a sequential decline in trading volumes due to softer market conditions, along with an impact on net interest income due to lower rates. But the company’s business model offers some protection. Higher volatility can lift trading margins, and Cantor expects higher returns from stocks and options to partly offset lower activity.
At the same time, the quality of crypto income may come under pressure. El-Assal noted that the platform’s “tiered pricing structure… results in lower returns for large active traders… and higher returns for marginal traders,” with the latter group retreating during volatility.
Despite these obstacles, both stocks have risen in recent weeks. Coinbase shares are up about 18% so far this quarter, while Robinhood is up about 40% in April from late March lows, helped by improving risk sentiment and easing geopolitical tensions.
The focus now is on what comes next. For Coinbase, investors are attentive to regulatory developments and new lines of business. The company’s market prediction offering, launched this year, “continues to attract significant interest,” El-Assal said.
Robinhood is also leaning into prediction markets along with other initiatives like tokenization and private market access. The analyst said these efforts, along with regulatory changes such as updates to intraday trading pattern rules, could help drive future growth.
Cantor maintained an “overweight” rating on Robinhood and raised his price target to $110.
The broader view, according to El-Assal, is that while current business trends remain tied to cryptocurrency price cycles, the next phase of growth will depend more on product expansion and new use cases.
Later on Tuesday, the New York Attorney General’s office filed a lawsuit against Coinbase and cryptocurrency exchange Gemini for their prediction market offerings, alleging that the products were actually gambling products and therefore violated state regulations.
It is currently a matter of debate in both state and federal courts whether prediction markets (specifically, sports-related prediction markets) are gambling products and they are not. The Commodity Futures Trading Commission has argued that prediction markets are swaps and therefore properly regulated by that agency at the federal level. States have argued that at least sports-related contracts are not exchanges and should be authorized and overseen by state regulators. This issue is likely to end up before the United States Supreme Court.
