Goldman Sachs Bullish on Brokerage and Crypto Trading Platforms: Can Prediction Markets Support a New Cycle?

Brief summary
· Goldman Sachs remains cautiously optimistic on brokerage and crypto stocks for the second half, with core support from a fall recovery in traditional trading and expansion of prediction markets; crypto recovery only provides additional upside.
· Summer retail trading has declined significantly, but after adjusting for account growth, per-account trading volume is still below the 2021 peak, and the top of the current trading cycle has not yet been determined.
· Prediction markets are becoming a new growth engine for brokers, with trading volume expected to rebound from September as sports events resume and the U.S. midterm elections approach.
· Crypto trading has declined for about 10 consecutive months, and the recent market cap rebound must be sustained and transmitted to trading volume to confirm a cycle turning point.
· Goldman Sachs prefers FIGR, HOOD, and IBKR, and views COIN as a resilient play when crypto recovers; amid divergent valuations, business diversification is key.

Brokerage and crypto-related stocks outperformed market expectations after the second-quarter earnings season.

According to Goldman Sachs, since the first company in the sector reported second-quarter results on July 21, the stocks it covers have risen an average of 3%, outperforming the S&P 500 by about 1 percentage point. Second-quarter industry earnings beat market expectations by 8%, revenue grew 2%, but expenses also increased by 5%.

Goldman Sachs remains cautiously optimistic for the second half. The core of this judgment is not that crypto trading has recovered, but that traditional brokerage and prediction markets have room for both structural growth and a fall recovery. The recent rebound in crypto asset market cap provides additional upside for the industry.

Summer trading slows, cycle may not have peaked

In July and August, U.S. retail stock trading volume fell about 15% and 14% month-over-month, respectively. In the second quarter, stock trading volume and margin balances were about 40% and 100% higher than the 2021 peak, and the market began to worry whether the current retail trading cycle has peaked.

Goldman Sachs' view is relatively moderate. The report notes that absolute trading volume hit a new high, partly due to the expansion of brokerage platforms. From 2023 to 2025, major brokerage accounts grew at an average annual rate of about 13%, and client assets grew about 40% annually. After adjusting for account growth, per-account trading volume in the second quarter of 2026 is still about 8% below the 2021 peak.

Margin balances show a similar pattern. Although the absolute level has clearly exceeded 2021, margin balances as a percentage of client assets remain below the previous cycle high. Since margin balances have historically been strongly correlated with retail stock trading volume, Goldman Sachs concludes that this cycle still has room for further expansion, though growth may slow.

After adjusting for account growth, per-account trading volume remains below the 2021 peak

Seasonality also needs to be considered. July and August are typically weak months for retail trading throughout the year, and this year's decline is more pronounced than historical seasonality, but some trading may have been pulled forward into June. That month, equity capital markets activity was active, driving retail participation and trading volume to record levels.

Goldman Sachs expects U.S. equity issuance to reach a record $675 billion in 2026, with about $252 billion issued in the second quarter. Historical data shows that equity issuance activity typically drives retail trading with a lag of about one quarter, and also benefits securities lending, stock trading, and IPO subscription businesses.

Based on seasonal recovery and equity issuance activity, Goldman Sachs expects third-quarter traditional retail brokerage commissions to grow 28% year-over-year, with stock and options trading volume growing an average of about 19%. This forecast still depends on whether September trading activity rebounds as expected.

Annual seasonality of retail trading volume

Prediction markets may have greater fall elasticity

Goldman Sachs believes that prediction markets have both structural growth and cyclical recovery potential, and the fall trading rebound may be more pronounced than in traditional brokerage.

From January 2024 to July 2026, prediction market annualized trading volume grew cumulatively by about 1160%. Since August 2025, monthly unique users have grown month-over-month except in April 2026, indicating that the user base is still expanding.

Rapid growth once masked the seasonality of prediction markets. According to Goldman Sachs data, sports, crypto, and political contracts account for the vast majority of trading volume. In July 2026, sports contracts accounted for about 79% of industry trading volume, crypto contracts about 15%, and political contracts about 2%.

Category composition of prediction market trading volume

These three types of contracts are driven by different cycles. Sports trading typically rebounds after major U.S. professional leagues resume, and is relatively active from September to January; political contracts see volume increase as elections approach; crypto event contracts are influenced by coin prices and crypto market trading cycles.

Due to relatively few summer sports events and the U.S. midterm election trading not yet peaking, August prediction market trading volume fell about 15% month-over-month. Goldman Sachs attributes this mainly to the seasonality of underlying event contracts, rather than the end of structural industry growth.

Starting in September, the U.S. sports schedule resumes and the midterm elections draw closer. If crypto market activity also improves, the three main contract types could create a compounding effect. However, as an asset class that has developed for less than three years, prediction markets still have limited historical data, and the stability of seasonal patterns needs further observation.

Online sports betting revenue is relatively active from September to January

Crypto market cap rebounds, but not yet transmitted to trading volume

Compared with traditional trading and prediction markets, Goldman Sachs is more cautious on crypto trading.

In July, industry crypto trading volume fell 30% month-over-month, and has fallen a further 21% so far in August. This downturn has lasted about 10 months, longer than the median of about 4 months from peak to trough in the past five crypto cycles.

According to the report, in the past six crypto cycles, total market cap and trading volume fell on average by about 51% and 66%, respectively; in the current cycle, as of the report's publication, they have fallen about 40% and 75%, respectively. This means the contraction in crypto trading activity has exceeded the historical average, but based on the decline and duration alone, it cannot be confirmed that the cycle has bottomed.

Average declines in crypto market cap and trading volume in past cycles

A positive signal comes from asset prices. In the week before the report's publication, total crypto asset market cap rose about 21%. Goldman Sachs believes that if the total market cap can remain at current levels for an extended period, trading volume may rebound as risk appetite improves.

The key here is "sustained." In April and May this year, crypto asset market cap also briefly rose about 5%, but then fell back, and trading volume did not form a sustained rebound. Therefore, the recent market cap increase can only raise the probability of a trading recovery, but is not yet sufficient evidence of a trend reversal.

The impact on brokerage and crypto companies is not identical. Goldman Sachs statistics show that since 2026, the median correlation between crypto-related company stock prices and total crypto market cap is about 36%. Platforms with more diversified businesses, such as Robinhood and Figure, have historically had relatively lower correlation with crypto prices; Coinbase's operating leverage is more direct.

Current crypto trading downturn lasts longer than historical median

Regulatory reform continues, but institutional entry still requires legislation

Regulation is another variable that determines whether the crypto market can shift from a cyclical rebound to structural expansion.

Goldman Sachs believes that the likelihood of the U.S. Congress passing the CLARITY Act crypto market structure bill during the current term is decreasing. The Senate failed to vote before the August recess, and the midterm elections and subsequent congressional recesses further compress legislative time.

Meanwhile, U.S. regulators continue to advance some reforms. The SEC recently proposed a digital asset "innovation exemption," planning to provide temporary exemptions from registration and qualification requirements for eligible digital asset issuers and securities. The OCC continues to approve digital asset companies to obtain trust bank charters, allowing them to engage in money transmission and asset custody.

These measures may promote the expansion of tokenization, custody, and decentralized finance applications, but Goldman Sachs emphasizes that administrative regulation is less durable than congressional legislation. To drive large-scale institutional adoption of digital assets, the market still needs a more stable and clear legal framework.

Goldman Sachs' 2025 institutional survey shows that 35% of surveyed managers cite lack of regulatory clarity as the biggest barrier to entering the crypto market, and 32% cite regulatory clarity as the top catalyst for institutional adoption. Therefore, short-term regulatory adjustments can improve the market environment, but congressional legislative progress is the core indicator that determines whether institutional capital can enter systematically.

Main barriers to institutional entry into the crypto market

Platforms are seeking revenue beyond crypto trading

Amid the crypto trading downturn, related companies are stabilizing earnings mainly through two methods: cutting expenses and developing new businesses with lower correlation to spot trading volume.

Goldman Sachs estimates that in 2026, five brokerage and crypto companies have taken cost adjustment measures, cutting annual expenses by an average of about 4% to 5%, equivalent to providing about 5.8 percentage points of support to adjusted operating margins. Cost control has not fully offset revenue downgrades, but has mitigated the impact of the trading downturn on earnings.

At the individual stock level, Goldman Sachs prefers FIGR, HOOD, and IBKR, and views COIN as an upside allocation when the crypto market recovers.

Robinhood's core logic is account asset growth and business diversification. Goldman Sachs expects HOOD's average revenue per user to grow at a compound annual rate of about 16% from 2025 to 2028, with client assets and revenue growing about 29% and 21%, respectively. Growth sources include traditional brokerage, prediction markets, digital banking, credit cards, and wealth management.

Among these, prediction markets are expected to contribute about 13% of HOOD's 2026 revenue. Its newly launched Rothera prediction market exchange achieved about 3 percentage points of market share less than two months after launch, corresponding to annualized revenue of about $150 million according to the report's calculations. Prediction markets are growing rapidly, but the platform is young, and whether the current share can be maintained remains to be seen.

HOOD revenue diversifying into prediction markets, subscriptions, and other businesses

Figure's main growth source is home equity line of credit (HELOC) lending. Quarter-to-date, its consumer lending marketplace trading volume is still tracking toward year-over-year growth of over 100%. Goldman Sachs believes the decline in the company's blended take rate is mainly due to product mix and channel changes, not simply price cuts: large first-lien HELOCs have lower rates, and the less capital-intensive FIGR Connect business also has lower rates but higher margins.

Interactive Brokers' advantage comes from globalization. Since 2026, over 75% of its monthly active users and about 85% of app downloads have come from outside the U.S. Goldman Sachs expects IBKR account growth of 33%, 24%, and 21% in 2026, 2027, and 2028, respectively, and average annual revenue growth of 15% from 2025 to 2028. Global account growth and a pre-tax margin above 75% make it relatively less sensitive to crypto price fluctuations.

Coinbase offers more direct crypto market leverage. Since the first quarter of 2024, the company's crypto derivatives market share has increased by about 8 percentage points; subscription and services businesses such as stablecoins, custody, staking, and Prime Brokerage already contributed about 40% of 2025 revenue. These revenues have relatively low correlation with crypto trading volume.

COIN is also expanding into prediction markets, stock trading, banking, and wealth management. Currently, these products contribute limited revenue, so Goldman Sachs views them primarily as potential upside rather than realized earnings.

COIN revenue migrating to subscription and services businesses

What to really watch next?

Goldman Sachs' optimistic view on brokerage and crypto stocks is based on several conditions that still need verification.

First, whether September retail stock and options trading volume can shake off the summer slump will determine whether the seasonal recovery in traditional brokerage holds. Second, whether sports events and the midterm elections can drive prediction market trading volume will verify whether prediction markets are a sustainable new business or a temporary high-growth category.

The crypto market needs to meet both price and volume conditions. Maintaining a high total market cap is only the first step; whether spot and derivatives trading volume subsequently rebounds will truly improve trading revenue for related companies. On the regulatory front, continued easing by administrative agencies can support short-term innovation, but whether Congress can form a stable market structure bill still determines the ceiling for institutional adoption.

Current sector valuations have pulled back, but the quality of growth within the industry is not uniform. FIGR, HOOD, and IBKR rely on lending, prediction markets, and global account growth to provide relatively independent fundamentals; COIN retains higher crypto cycle elasticity.

Therefore, this report is not betting that a crypto bull market has restarted. Goldman Sachs places more weight on the fact that brokerage and crypto platforms are increasing revenue sources that do not depend on a single trading cycle. What needs to be verified next is whether these new businesses can continue to support growth after the fall trading recovery.