Coinbase Institutional Says Crypto Market Is in 1996 Phase
- Coinbase Institutional says crypto’s 2026 setup resembles 1996, driven by regulation.
- Institutions shift from passive holdings into trading, custody, and block space roles.
- Bitcoin volatility fell to 35–40% in late 2025, as stablecoins expand toward $1.2 trillion.
Coinbase Institutional said this week that crypto markets resemble 1996, not a late-cycle bubble peak. This view is from its 2026 Crypto Market Outlook, released yesterday, detailing conditions after a volatile 2025 crypto market. The report explains how regulatory progress, institutional behavior, and infrastructure demand influenced this assessment.
Institutions Move From Exposure to Infrastructure
Coinbase Institutional framed 2026 as a transition year driven by institutional participation at the infrastructure level. Notably, the report said large firms are moving beyond passive holdings into trading, custody, and block space procurement. This shift reflects what Coinbase calls a “DAT 2.0” model.
Under this model, institutions treat sovereign block space as a strategic commodity. The report said firms now plan storage, execution, and settlement together. As a result, crypto participation increasingly resembles professional market infrastructure rather than speculative positioning.
However, this change depends on regulatory clarity. Coinbase Institutional pointed to advancing global frameworks as a key enabler. Clear rules influence compliance planning, portfolio construction, and long-term risk management.
In the United States, the report cited progress on stablecoin legislation, including the GENIUS Act. It also referenced momentum toward a broader crypto market structure bill. According to Coinbase Institutional, these steps reduce uncertainty that previously limited institutional engagement.
As regulation grows, institutions also adjust token strategies. The report described a move toward “Tokenomics 2.0,” emphasizing revenue-linked value capture. This approach contrasts with earlier narrative-driven models.
Technology Focus Shifts Toward Utility and Specialization
Coinbase Institutional identified several technologies gaining traction as institutions scale their involvement. Notably, demand for on-chain privacy continues to rise. The report noted increased development of zero-knowledge proofs and fully homomorphic encryption.
These tools support compliance-aware privacy rather than anonymity. Coinbase Institutional said usage of on-chain privacy tools already shows measurable growth. This trend shows institutional requirements rather than retail experimentation.
Meanwhile, AI-driven systems now intersect directly with crypto payments. The report said agentic systems require programmable settlement layers. Protocols like x402 support autonomous microtransactions and service governance.
This capability allows AI agents to transact, secure services, and manage on-chain operations. As a result, crypto becomes a functional infrastructure for automated economic activity. However, infrastructure design also grows. Coinbase Institutional said application-specific chains continue to expand. These networks optimize performance for finance, gaming, or data services.
Still, the report does not expect endless fragmentation. Instead, it projects a network-of-networks model. Native interoperability and shared security define that endpoint. Another major focus involves tokenized equities. Coinbase Institutional said tokenization offers atomic composability benefits.
DeFi-style loan-to-value ratios already exceed traditional margin frameworks in many cases. These developments signal a utility-driven cycle. They also connect directly to broader financial integration, especially around payments and derivatives.
Related: Coinbase Challenges State Regulators Over CFTC Markets Rule
Market Structure, Volatility, and Financial Integration
Coinbase Institutional described the crypto market structure as steadily maturing. The report said digital assets now function as an emerging global market infrastructure. However, volatility and liquidity gaps still defined much of 2025.
Bitcoin’s volatility outlook shows this evolution. Coinbase Institutional reported BTC’s 90-day volatility fell to 35–40 percent by late 2025. That level dropped from over 60 percent in mid-2024. Notably, this moderation came alongside spot Bitcoin ETF approvals and launches.
The report said Bitcoin volatility now resembles high-growth technology stocks. This shift shows structural adoption rather than reduced market stress. Bitcoin reached new cycle highs before a sharp correction. Elevated leverage and forced liquidations emphasized price swings.
Despite that, Coinbase Institutional called 2025 a milestone year. The report said Bitcoin became firmly established in global financial discussions. Coinbase Institutional also forecasts a stablecoin market cap near $1.2 trillion by 2028. Growth drivers include payments, payroll, settlement, and cross-border remittances.
Prediction markets and crypto derivatives also feature. The report expects equity perpetuals to gain retail interest. Additionally, potential U.S. tax changes may broaden prediction-market volumes. These elements collectively push crypto closer to the financial core. Integration depends on execution, compliance, and product quality.
Coinbase Institutional’s outlook ties institutions, technology, and regulation into a single timeline. It frames 2026 as an early-internet-style build phase rather than speculative excess. The report presents crypto as infrastructure taking shape, supported by regulation, specialization, and institutional participation.
