Crypto markets are entering a phase where concentration of activity matters more than narrative momentum, according to a new outlook from Coinbase Institutional that frames the year 2026 as a test of whether major cryptocurrency markets can scale under more disciplined conditions.
The report, written by global research head David Duong and research associate Colin Basco, argues that familiar crypto cycle models (built around retail speculation, token launches and protocol-specific catalysts) are becoming less reliable as institutional participation and market control play a larger role in shaping price behavior.
Perpetual futures increasingly anchor price discovery
Coinbase identifies perpetual futures as a central pillar of crypto market activity, noting that derivatives now account for the majority of trading volume in major venues. According to the company, this has changed the mechanics of price formation towards positioning, funding rates and liquidity conditions, rather than relying solely on retail-driven momentum.
The report states that leverage fell sharply following the sell-off events at the end of 2025, particularly in derivatives markets. Coinbase characterizes that reduction as a structural reset rather than a pullback, arguing that speculative excess was eliminated while participation in perpetual futures remained resilient. Duong and Basco write that tighter margin practices and improved risk controls are helping markets absorb shocks more efficiently, even as derivatives continue to dominate liquidity.
Prediction markets moving towards sustained relevance
From derivatives, the report moves on to prediction markets, which Coinbase describes as an evolution from experimental products toward more durable financial infrastructure. The firm points to rising notional volumes and increased liquidity as signs that these markets are increasingly being used for information discovery and risk transfer.
Coinbase also notes that fragmentation among prediction platforms is driving demand for aggregation and improved efficiency. According to the report, this dynamic is attracting more sophisticated participants and expanding its use beyond crypto-native traders, particularly as regulatory clarity improves in certain jurisdictions.
Stablecoins and payments support real-world activity
The final area Coinbase highlights focuses on stablecoins and payments, which the company describes as the most persistent source of real-world use of cryptocurrencies. Duong and Basco write that stablecoin transaction volumes continue to grow through settlements, cross-border transfers, and liquidity management, rather than speculative trading.
Coinbase says payments activity is increasingly intertwined with other parts of the ecosystem, including automated trading strategies and emerging applications powered by artificial intelligence. Rather than viewing artificial intelligence as a competitive pressure, the firm maintains that these developments reinforce blockchain-based payments as fundamental infrastructure within digital markets.
Coinbase says 2026 will test whether these markets can continue to scale and manage risk under tighter conditions, an outcome the company believes will shape the future of cryptocurrencies long after the next price cycle fades.
