Coinbase Institutional Outlines Three Market Pillars Shaping Crypto in 2026

• Coinbase Institutional says derivatives now dominate price discovery as leverage, funding, and liquidity drive markets.
• Prediction markets are shifting from experiments to core infrastructure, supported by higher volumes and deeper liquidity.
• Stablecoins remain crypto’s most consistent real-world use case, driven by payments, settlement, and liquidity management.

Crypto markets are moving away from narrative-driven cycles and toward structurally concentrated activity, according to a new outlook from Coinbase Institutional. The report frames 2026 as a period that will test whether core crypto markets can scale and manage risk under tighter financial conditions, with trading and adoption increasingly shaped by infrastructure rather than speculation.

The analysis was authored by Coinbase Institutional’s global head of research David Duong and research associate Colin Basco. It argues that traditional crypto cycle models, typically linked to retail inflows, token launches, and short-lived protocol narratives, are becoming less reliable as institutional participation and market structure play a larger role in price behavior.

Derivatives Anchor Price Formation

The report identifies perpetual futures as the primary driver of crypto market activity heading into 2026. According to Coinbase, derivatives now account for the majority of trading volume across major venues, shifting price discovery toward leverage positioning, funding rates, and liquidity conditions.

Coinbase notes that liquidation events in late 2025 led to a reduction in leverage, particularly within derivatives markets. Rather than viewing this as a contraction, the firm characterizes it as a structural reset that removed speculative excess while leaving participation in perpetual futures largely intact. Tighter margin requirements and improved risk controls are cited as factors that have enabled markets to absorb volatility more efficiently.

Prediction Markets Gain Structural Traction

Prediction markets are described as a second area of accelerating activity. Coinbase reports that rising notional volumes and deeper liquidity suggest these platforms are moving beyond experimental use cases. The firm highlights their growing role in information discovery and risk transfer.

Fragmentation across prediction market platforms has increased demand for aggregation and efficiency, according to the report. Coinbase states that this trend is attracting more sophisticated participants and expanding usage beyond crypto-native traders, particularly as regulatory clarity improves in some jurisdictions.

Stablecoins Drive Persistent Usage

The third pillar identified by Coinbase centers on stablecoins and payments. The firm describes stablecoins as crypto’s most consistent source of real-world activity, with transaction volumes continuing to grow through settlement, cross-border transfers, and liquidity management rather than speculative trading.

Coinbase reports that payment activity is increasingly interconnected with other areas of the ecosystem, including automated trading strategies and emerging AI-related applications. The firm frames stablecoins as foundational infrastructure supporting these developments, rather than as isolated payment tools.

Coinbase concludes that 2026 will serve as a proving ground for whether these concentrated market segments can continue to scale while managing risk under more disciplined conditions. The firm states that the outcome will influence how crypto markets function well beyond the next price cycle.