Prediction markets are gaining traction as a new growth area for Coinbase (COIN) and Robinhood (HOOD) as investors look past a weak first quarter for crypto trading and focus on future products, according to Cantor Fitzgerald analyst Ramsey El-Assal.
El-Assal said “investors are increasingly treating the quarterly print as backward-looking,” with attention shifting to “forward demand trends and the product roadmap,” including newer offerings such as prediction markets.
Both companies are expected to report softer results for the first quarter of 2026 following a setback in crypto prices and trading activity. Bitcoin and ether (ETH) fell about 23% and 29% in the quarter, weighing on volume across exchanges. Trading activity also fell as the quarter progressed, with Coinbase volume falling from about $66 billion in January to $54 billion in March, based on third-party data.
Cantor estimates Coinbase’s consumer and institutional trading volumes at $35 billion and $167 billion, both below Wall Street expectations. The firm also expects stock market revenue below consensus. Still, El-Assal maintained an “overweight” rating on the stock and raised his price target to $250, citing improved sentiment and long-term growth drivers.
Robinhood faces similar pressures in the near term. The analyst expects a sequential decline in trading volume due to softer market conditions, along with a hit to net interest income from lower interest rates. But the company’s business model offers some padding. Higher volatility could lift trading margins, and Cantor expects stronger returns on stocks and options to partially offset weaker activity.
At the same time, crypto revenue quality may come under pressure. El-Assal noted that the platform’s “differentiated pricing structure … earns lower returns on large active traders … and higher returns on marginal traders,” with the latter group retreating during volatility.
Despite these headwinds, both stocks have rallied in recent weeks. Coinbase shares are up about 18% quarter-to-date, while Robinhood is up about 40% in April from late March lows, helped by improving risk sentiment and easing geopolitical tensions.
The focus is now on what comes next. For Coinbase, investors keep an eye on legislative developments and new business areas. The company’s prediction markets offering, launched this year, “continues to attract meaningful interest,” El-Assal said.
Robinhood is also leaning into prediction markets, along with other initiatives such as tokenization and private market access. The analyst said these efforts, along with regulatory changes like updates to pattern day trading 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 trading trends remain tied to crypto 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 fellow crypto exchange Gemini over their predictable market offerings, alleging that the products were actually gambling products and therefore in violation of state regulations.
Whether or not prediction markets—specifically, sports-related prediction markets—are gaming products is currently a matter of debate in both state and federal courts. The Commodity Futures Trading Commission has argued that prediction markets are swaps and are therefore properly regulated by that agency at the federal level. States have argued that at least the sports-related contracts are not swaps and should be licensed and overseen by state regulators. This issue is likely to end up before the US Supreme Court.
