For trading-first platforms like Coinbase and Robinhood, the challenge is whether they can effectively expand into adjacent financial products while remaining linked to market cycles.

Written by: Fintech Blueprint

Translated and compiled by: BitpushNews

Cryptocurrency is deep in a bear market.

Bitcoin is currently hovering around $80,000, down about 36% from its peak of nearly $126,000 in October 2025. According to data from Coinbase, the spot trading volume on centralized exchanges has shrunk to its lowest level since September 2019, falling 44% year over year in the first quarter.

Market Situation

Some on-chain analysts believe that the recent rebound from $60,000 may lack momentum. This is the longest lasting bear market rebound in the past two cycles, but its performance leans more towards a technical adjustment rather than being driven by fundamentals. The rise in derivative (perpetual contract) open interest coexists with a decline in spot activity, indicating that this latest uptick is mainly driven by short squeezes and speculative position liquidations, rather than sustained buying.

The decline in activity is eroding trading platform revenues. Coinbase's first-quarter revenue dropped 31% year over year to $1.41 billion, with a net loss of $394 million, compared to a profit of $66 million in the same period last year. Management also announced layoffs of 700 employees (about 14% of the total workforce) in the same week, citing the cyclical nature of cryptocurrency and a cost reset in the "AI era."

Trading Business: The Core Decline

The trading business is at the center of the decline.

Trading revenue accounted for 56% of total revenue in the first quarter, down 40% year over year. Retail trading revenue fell 48% to $567 million. Institutional trading revenue actually grew during this period, but this growth was almost entirely due to the acquisition of Deribit for $4.3 billion completed in August 2025; excluding this impact, organic institutional trading volume actually fell 48%.

The remaining revenue comes from subscription and service businesses, spanning stablecoin income (interest earned from customer USDC balances through Coinbase's partnership with Circle), blockchain rewards, interest and financial fees, as well as other subscription products like Coinbase One.

This segment currently accounts for 44% of total revenue, and management describes it as a "durable buffer" against trading volatility. However, this is somewhat misleading. Stablecoin income is the single largest revenue source, accounting for 22% of net revenue, up 11% year over year, but it is highly correlated with trading volume. When customers want to avoid volatility or rotate between assets, they will move into USDC; once the market improves, they will reinvest in volatile assets. This dynamic is part of the reason why the proportion of subscription and service revenue has remained fairly steady over the past three years.

Robinhood: The Power of Diversification

Meanwhile, Robinhood has reported stronger data.

Its revenue grew 15% year over year to $1.07 billion, with a net profit of $350 million, although it still fell short of analyst revenue expectations.

Like Coinbase, the shortfall was mainly dragged down by cryptocurrency, with related trading revenue down 47% year over year to $134 million. Notably, this was the only major revenue line that declined year over year.

Trading still represents 58% of Robinhood's revenue, roughly flat from a year ago. However, due to the diversity of trading assets, the company has shown greater resilience during the bear market. Total trading revenue grew 7% year over year to $623 million, primarily driven by a 320% surge in prediction market revenue brought in through their partnership with Kalshi, a 46% increase in stock revenue, and an 8% rise in options revenue.

Resilience of Derivatives and Prediction Markets

Prediction markets and derivatives like perpetual contracts have demonstrated greater resilience during downturns. Kalshi raised $1 billion last week at a valuation of $22 billion, having doubled its valuation in just six months, with an annual trading volume reaching $178 billion, growing twofold.

Event-driven trading (such as prediction markets) typically focuses on sports, elections, and economic data, hence it is less sensitive to the overall market. Additionally, as institutions begin to use it as a hedging tool during market volatility, this growth also stems from organic adoption by institutions, a trend that masks market cyclicality.

Perpetual contracts have shown a similar pattern. As of the end of April, the total leveraged positions held by traders on the Hyperliquid platform amounted to $4.3 billion, despite the spot market crashing, still growing by over 9% in the past two months. Although this metric has retraced from the October peak like other parts of the crypto market, its retention is noticeably better.

Strategic Differences of Platforms

This is crucial for trading platforms equipped with these features.

Prediction markets currently account for 17% of Robinhood's total trading revenue! While it does not directly offer perpetual contracts, it provides similar margin trading for stocks and cryptocurrencies, earning interest from it. In the first quarter of 2026, margin interest income grew 75% year over year to $193 million, accounting for 18% of total revenue.

Coinbase has been slow to make this shift. Although it only launched prediction markets and perpetual contracts for retail customers in January 2026, it has not made a material impact on its breakeven point. As a result, the exchange is more exposed to spot trading risks.

Comparison with Fintech Giants

Financial platforms like Revolut, which are payment and banking-focused while also hosting significant trading activities, face much less impact. Its revenue grew 45% in 2025 to $6.1 billion, with major revenue streams evenly distributed, each accounting for between 13% to 22%.

Card swipe fees (Interchange fees) and interest income are the largest sources, each approximately $1.3 billion. Cryptocurrency trading falls under the Wealth segment, grouped with stocks and contracts for difference (CFDs), making up only 15% of total revenue, a tiny fraction compared to Robinhood's exposure and minuscule compared to Coinbase.

Notably, Revolut's interest income is similar to Coinbase's stablecoin income, both monetizing idle customer funds. Revolut holds 90% of its $68 billion customer balances in cash and government bonds by the end of the year. However, the behavior driving these balances is substantively different: Revolut's deposit growth stems from increasing major bank relationships and direct payroll deposits (up 45% year over year), whereas Coinbase's USDC balance growth is due to decreased trading willingness. If the crypto market turns bullish, it is more likely that Coinbase's balances will decline.

Conclusion

For trading-first platforms like Coinbase and Robinhood, the challenge lies in whether they can effectively expand into adjacent financial products while remaining linked to market cycles. Robinhood has demonstrated how the diversity of trading asset classes (especially prediction markets and derivatives) can serve as a hedge.

Coinbase is also moving in a similar direction. The risk is that an extended bear market could hinder their growth capabilities, while fintech competitors like Revolut, Nubank, and Cash App are continuing to expand their share of customer deposits.

Image source: FB Analysis / Google Finance