Prediction markets are emerging as an unexpected growth lever for Coinbase and Robinhood as both firms try to look past a weak Q1 for crypto trading and sell the story of future products, Cantor Fitzgerald analyst Ramsey El‑Assal says.
Why prediction markets matter
According to El‑Assal, investors are increasingly viewing quarterly results as “backward‑looking” and are instead focused on forward demand trends and product roadmaps. New offerings such as prediction markets are getting particular attention as potential sources of diversified revenue and user engagement.
The near‑term drag
Both Coinbase and Robinhood are likely to report softer Q1 results after crypto prices and trading activity cooled. Bitcoin and ether slid roughly 23% and 29% during the quarter, and trading volumes on exchanges eased as the quarter progressed. Coinbase’s overall volumes, by third‑party data, fell from about $66 billion in January to $54 billion in March. Cantor Fitzgerald estimates Coinbase’s consumer and institutional trading volumes at about $35 billion and $167 billion, respectively—both below Street expectations—and projects exchange revenue under consensus.
Still bullish on the outlook
Despite the softness, El‑Assal kept an “overweight” rating on Coinbase and raised his price target to $250, citing improving sentiment and longer‑term growth drivers.
Robinhood’s balance of risks and offsets
Cantor expects Robinhood to face similar near‑term pressure—sequential declines in trading volumes and a hit to net interest revenue from lower rates. But the platform has some built‑in cushions: higher volatility can raise trading margins, and stronger yields in equities and options should partly offset softer activity. Cantor reiterated an “overweight” on Robinhood and lifted its price target to $110.
One structural risk for Robinhood is crypto revenue quality. El‑Assal notes the firm’s tiered pricing earns lower yields on large, active traders and higher yields on marginal traders—the latter group being more likely to pull back during turbulent markets.
Recent market moves and product push
Both stocks have bounced recently: Coinbase is up roughly 18% quarter‑to‑date, while Robinhood surged about 40% in April from late‑March lows, helped by better risk sentiment and easing geopolitical tensions. Investors are now watching product rollouts and regulatory developments closely. Coinbase’s prediction markets, launched this year, “continue to attract meaningful interest,” El‑Assal said. Robinhood is also pushing into prediction markets and exploring tokenization and private market access, along with potential tailwinds from regulatory changes like updated pattern‑day trading rules.
Regulatory uncertainty looms
That product push faces a significant regulatory test: the New York Attorney General’s office filed suit against Coinbase and Gemini over their prediction market offerings, alleging the products are effectively gambling and violate state rules. The legal status of prediction markets—especially sports‑related contracts—is a contested issue. The CFTC has argued prediction markets are swaps and fall under federal oversight, while some states contend sports contracts are not swaps and should be regulated at the state level. That dispute could ultimately wind up before the U.S. Supreme Court.
Bottom line
Cantor’s view: near‑term performance will still track crypto price cycles, but the next phase of growth for Coinbase and Robinhood will depend more on product expansion—prediction markets included—and regulatory clarity that determines how those products can scale.
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