Crypto markets are entering a phase where concentration of activity matters more than narrative momentum, according to a new outlook from Coinbase Institutional that views 2026 as a test of whether major crypto markets can operate under more disciplined conditions.
The report, authored by global research director David Duong and research associate Colin Basco, argues that familiar crypto cycle patterns – built around retail speculation, token launches and protocol-specific catalysts – are becoming increasingly unreliable as institutional participation and market plumbing play a larger role in shaping price behavior.
Perpetual futures increasingly anchor price discovery
Coinbase identifies perpetual futures as a central pillar of crypto market activity, noting that derivatives now account for the majority of trading volume on major platforms. According to the company, this has shifted price formation mechanisms towards positioning, funding rates and liquidity conditions, rather than relying solely on retail dynamics.
The report indicates that leverage was sharply reduced following the liquidation events occurring in late 2025, particularly in derivatives markets. Coinbase calls this pullback a structural reset rather than a pullback, arguing that speculative excesses were removed while participation in perpetual futures remained resilient. Duong and Basco write that tighter margining practices and improved risk controls help markets absorb shocks more effectively, even as derivatives continue to dominate liquidity.
Prediction Markets Evolve Towards Enduring Relevance
From derivatives, the report turns to prediction markets, which Coinbase describes as evolving from experimental products toward more sustainable financial infrastructure. The company points to rising notional volumes and increasing liquidity as signs that these markets are increasingly being used for information discovery and risk transfer.
Coinbase also notes that fragmentation between prediction platforms is driving demand for aggregation and improved efficiency. According to the report, this dynamic is attracting more sophisticated participants and expanding its use beyond native cryptocurrency traders, especially as regulatory clarity improves in certain jurisdictions.
Stablecoins and payments support real-world activity
The latest area highlighted by Coinbase focuses on stablecoins and payments, which the company describes as the most persistent source of real-world crypto usage. Duong and Basco write that stablecoin trading volumes continue to grow through settlement, cross-border transfers and liquidity management, rather than speculative trading.
Coinbase says payments activity is increasingly linked to other parts of the ecosystem, including automated trading strategies and emerging AI-based applications. Rather than viewing artificial intelligence as a competitive pressure, the company says these developments strengthen blockchain-based payments as the fundamental infrastructure of digital markets.
Coinbase says 2026 will test whether these markets can continue to evolve and manage risk under tighter conditions, an outcome the company believes will shape the future of crypto long after the next price cycle has faded.
