Cantor Fitzgerald analyst Ramsey El-Assal said prediction markets are gaining traction as a new growth area for Coinbase (COIN) and Robinhood (HOOD) as investors look away from a weak first quarter for cryptocurrency trading and instead focus on future products.
“Investors increasingly view quarterly reports as backward-looking,” Assal said, with attention turning to “forward-looking demand trends and product roadmaps,” including new products such as prediction markets.
Both companies are expected to report weak results for the first quarter of 2026 after a pullback in cryptocurrency prices and trading activity. Bitcoin Ethereum (ETH) fell approximately 23% and 29% this quarter, putting pressure on trading volumes across exchanges. Trading activity also slowed as the quarter progressed, with Coinbase trading volume falling from about $66 billion in January to $54 billion in March, according to third-party data.
Cantor estimated Coinbase’s consumer and institutional trading volumes at $35 billion and $167 billion, respectively, both below Wall Street expectations. The company also expects foreign exchange earnings to be below consensus. Still, Assal maintained an “overweight” rating on the stock and raised his price target to $250, citing improving sentiment and long-term growth momentum.
Robinhood has faced similar pressure recently. The analyst expects volume to decline sequentially due to soft market conditions and a hit to net interest income from falling interest rates. But the company’s business model provides some cushion. Higher volatility can boost trading profits, and Cantor expects rising yields on stocks and options to partially offset weaker activity.
At the same time, cryptocurrency revenue quality may be under pressure. El-Assal noted that the platform’s “tiered pricing structure… results in lower yields for large active traders… and higher yields for marginal traders” who pull back during periods of volatility.
Despite these headwinds, both stocks have rallied in recent weeks. Coinbase shares are up about 18% so far this quarter, while Robinhood shares are up about 40% in April from their lows in late March, helped by improving risk sentiment and easing geopolitical tensions.
The focus now is on what happens next. For Coinbase, investors are watching regulatory developments and new business lines. El-Assal said the company’s prediction markets product, launched this year, “continues to attract strong interest.”
Robinhood is also working on prediction markets and other initiatives such as tokenization and private market access. The analyst said these efforts, coupled with regulatory changes such as updates to day trading rules, could help drive future growth.
Cantor maintained its “overweight” rating on Robinhood and raised its price target to $110.
The broader view, according to El-Assal, is that while current trading trends remain relevant to the cryptocurrency price cycle, the next phase of growth will depend more on product expansion and new use cases.
Late Tuesday, the New York Attorney General’s Office filed a lawsuit against Coinbase and fellow cryptocurrency exchange Gemini over their prediction market products, alleging that the products were actually gambling products and thus violated state regulations.
Whether prediction markets—particularly those related to sports—are products of gambling is not currently a subject of debate in state and federal courts. The Commodity Futures Trading Commission believes that prediction markets are swaps and therefore are appropriately regulated by the agency at the federal level. States argue that at least sports-related contracts are not swaps and should be licensed and overseen by state regulators. The issue will likely end up before the U.S. Supreme Court.
