Coinbase Faces Decline in Spot Trading as Wall Street Lowers Earnings Forecasts

Wall Street predicts a challenging second quarter for Coinbase, driven by a downturn in crypto trading activity and the impact of pending U.S. legislation.

By Helene Braun | Edited by Jamie Crawley July 29, 2026, 3:15 p.m. 4 min read

Coinbase (COIN) is set to release its second-quarter earnings on Thursday, but analysts largely believe that the actual figures will be overshadowed by management's outlook for the latter half of the year and the evolving regulatory environment.

The consensus indicates that Q2 was particularly tough for crypto trading, with spot trading volumes declining across the market as investors adopted a more cautious stance. Bitcoin BTC$63,834.96 and ether (ETH) both experienced lower trading averages compared to the previous quarter, while retail engagement remained subdued. The crypto markets faced significant headwinds during the second quarter, with Bitcoin dropping approximately 14% and Ether falling around 25%. Although June showed slight improvements, analysts argue it was insufficient to counteract the losses from April and May.

Analysts are divided on how much this slowdown will impact Coinbase's financial results and how quickly new revenue streams can lessen the company's reliance on trading fees.

Significant Trading Slowdown

Major Wall Street firms, including Barclays, Benchmark, Clear Street, and Compass Point, have all reduced their earnings estimates for Coinbase due to decreased spot trading activity.

Barclays analyst Benjamin Budish estimates that Coinbase processed about $152 billion in trading volume during the quarter, significantly lower than the anticipated $178 billion. He predicts that adjusted EBITDA will be approximately 3% below consensus, attributing this to weaker blockchain rewards and institutional trading revenue.

Clear Street's Owen Lau has also revised his estimates, forecasting a trading volume of about $160 billion and an adjusted EBITDA of $301 million due to disappointing retail activity.

Benchmark's Mark Palmer has similarly adjusted his EBITDA forecast to $377 million, while Compass Point anticipates revenues will slightly miss expectations but believes EBITDA will align with projections.

Coinbase's fortunes remain closely tied to crypto trading trends, a dependency that has become increasingly evident over the past year. The company has invested heavily in diversifying its revenue streams through stablecoins, derivatives, payment solutions, tokenization, and its Base blockchain, though these segments still lag behind transaction revenue.

Stable Subscription Revenue

Analysts express a more positive outlook regarding subscription and services revenue, which encompasses interest income from USDC, staking rewards, custody fees, Coinbase One subscriptions, and institutional services. Since these revenue sources are less dependent on daily trading volumes, they are expected to cushion the impact of weaker transaction revenues.

Benchmark believes subscription and services revenue will provide stability, while Barclays anticipates revenues to be closer to the lower end of Coinbase's guidance due to declining crypto prices and only modest growth in USDC balances. Compass Point remains cautious, suggesting that this segment may fall below the midpoint of management's guidance owing to lower crypto prices and slower growth in stablecoins.

Growth in Prediction Markets

Though Q2 results may appear weak, analysts will be particularly attentive to management's insights on newer offerings.

Prediction markets have surfaced as one of Coinbase's rapidly expanding segments, fueled by increased interest surrounding sporting events. Barclays views this area as becoming a significant contributor, while Clear Street identifies prediction markets as one of several long-term growth opportunities.

However, not all analysts concur on the profitability of this segment. Compass Point warns that investors might overrate its profitability since Coinbase records gross revenue while sharing profits with Kalshi, leading to a smaller net contribution than the headline figures indicate.

Derivatives also present an area of interest. Coinbase's international perpetual futures operations and its acquisition of Deribit expose the company to a much larger global market than just spot trading. While analysts generally view derivatives as a long-term opportunity, many assert that they contributed minimally to mitigate the decline in spot volumes during Q2.

Regulatory Uncertainties

The most significant debate is not centered on the quarterly results but rather on developments in Washington.

The Clarity Act, which aims to establish a regulatory framework for digital assets in the U.S., remains a focal point for investors.

Benchmark believes recent advancements in ethics provisions have significantly improved the chances of the bill passing in the Senate, positioning it as a crucial potential catalyst for Coinbase's stock. Conversely, Barclays adopts a more cautious stance, warning that the legislative agenda is tight and competing priorities could still postpone the bill's progression.

Compass Point is the most skeptical, noting that the Senate's timetable offers little leeway before the August recess, cautioning that Coinbase's valuation may face pressure if the legislation stalls.

The earnings report may ultimately reflect past performance.

Investors are likely to concentrate on management's guidance for Q3, updates regarding layoffs and cost reductions, progress in derivatives and prediction markets, and whether Coinbase is beginning to lessen its reliance on the crypto trading cycle.

This transition remains a pivotal topic for investors. Advocates believe Coinbase is steadily establishing multiple recurring revenue streams that can stabilize earnings over time, while critics argue that despite these efforts, the business still heavily relies on retail crypto activity, with Q2 expected to reinforce that reality.

As of the latest update, COIN shares traded approximately 1.7% lower at $165.