Crypto markets are entering a phase where concentration of activity matters more than narrative momentum, according to a new view from Coinbase Institutional that frames 2026 as a test of whether crypto’s core markets can scale under more disciplined conditions.
The report, written by global head of research David Duong and research associate Colin Basco, argues that well-known crypto cycle models – built around retail speculation, token launches and protocol-specific catalysts – are becoming less reliable as institutional participation and market plumbing play a greater role in shaping price behavior.
Perpetual futures increasingly anchor price discovery
Coinbase identifies perpetual futures as a key pillar of crypto market activity, noting that derivatives now account for the majority of trading volume across major venues. According to the firm, this has shifted the mechanics of pricing towards positioning, funding rates and liquidity ratios, rather than relying solely on retail-driven momentum.
The report states that leverage was sharply reduced following liquidation events at the end of 2025, particularly in derivatives markets. Coinbase characterizes this drawdown as a structural reset rather than a retreat, arguing that speculative profits were removed while participation in perpetual futures remained resilient. Duong and Basco write that tighter margin practices and improved risk controls contribute to markets that absorb shocks more effectively, although derivatives continue to dominate liquidity.
Prediction markets are moving towards sustained relevance
From derivatives, the report turns to prediction markets, which Coinbase describes as evolving from experimental products to more sustainable financial infrastructure. The firm points to rising theoretical volumes and deeper liquidity as signs that these markets are increasingly being used for information seeking and risk transfer.
Coinbase also notes that fragmentation across prediction platforms is driving demand for aggregation and improved efficiency. According to the report, this dynamic is attracting more sophisticated participants and expanding usage beyond crypto-native traders, especially as regulatory clarity improves in certain jurisdictions.
Stablecoins and payments support real-world activity
The final area Coinbase highlights centers on stablecoins and payments, which the firm describes as crypto’s most enduring source of real-world use. Duong and Basco write that stablecoin transaction volume continues to grow through settlement, cross-border transfers and liquidity management rather than speculative trading.
Coinbase states that payment activity is becoming increasingly intertwined with other parts of the ecosystem, including automated trading strategies and new AI-powered applications. Rather than seeing artificial intelligence as a competitive pressure, the firm argues that these developments are empowering blockchain-based payments as the basic infrastructure of digital markets.
Coinbase says 2026 will test whether these markets can continue to scale and manage risk under tighter conditions, an outcome the firm believes will shape the future of crypto long after the next price cycle fades.
