Coinbase and Robinhood Turn to Prediction Markets for Future Expansion

The growth prospects of Coinbase and Robinhood are increasingly tied to their ability to expand into new areas, such as prediction markets, according to Cantor Fitzgerald analyst Ramsey El-Assal. This shift in focus comes as investors look past the weak first quarter for crypto trading and towards future product launches. Both companies are expected to report softer results for the first quarter of 2026 due to a decline in crypto prices and trading activity. Despite this, El-Assal maintains an 'overweight' rating on both stocks, citing improving sentiment and long-term growth drivers. The analyst notes that while current trading trends are influenced by crypto price cycles, the next phase of growth will depend on product expansion and new use cases. Both Coinbase and Robinhood are investing in prediction markets, with Coinbase's offering launched this year attracting significant interest. However, regulatory challenges are emerging, with the New York Attorney General's office filing a lawsuit against both companies over their prediction market offerings, alleging they constitute gambling products. The debate over whether prediction markets are gambling products or not is ongoing, with the Commodity Futures Trading Commission arguing they are swaps, while states argue they should be licensed and overseen by state regulators.