Bull Market End? Barclays Bank Warns of 2026 Crypto Downturn with No Major Catalysts

In its year-end report, Barclays predicts that the cryptocurrency market will enter a downturn by 2026, with trading volumes declining and investor enthusiasm waning. The bank notes that major digital asset exchanges face challenging environments, with unclear catalysts to stimulate activity and slow token adoption. While regulatory clarity and tokenized assets are gaining attention, Barclays believes these long-term investments are unlikely to materially impact earnings in 2026, and the market may experience a transitional year lacking significant positive catalysts.

Why Barclays Is Bearish on the 2026 Cryptocurrency Market

Barclays’ bearish forecast is not unfounded but based on an in-depth analysis of structural market issues. The report indicates that spot crypto trading volume appears to be trending downward in fiscal year 2026, and the bank “is not sure what will reverse this trend.” This candid admission shows that even the most seasoned Wall Street analysts cannot identify a clear path for market rebound.

Retail-focused exchanges benefited from increased trading interest during the crypto bull market in recent years but now face a more subdued environment. Spot market trading volume is the primary revenue driver for the largest compliant U.S. exchanges and companies like Robinhood, but this engine has cooled significantly. Without a clear spark to reignite demand, trading volumes may remain subdued. Barclays’ data shows that spot trading volume in the second half of 2025 has fallen more than 40% from its peak earlier in the year. If this trend continues into 2026, it will directly impact exchange revenues.

The crypto market is often volatile around major events. Barclays points out that past surges, such as inflows into spot Bitcoin ETFs in March 2024 or the presidential victory supporting cryptocurrencies in November, were short-term catalysts. In the absence of such events, the bank believes structural growth is insufficient. This “catalyst-driven” market characteristic exposes the core dilemma facing the 2026 crypto market: known positives are exhausted, and new catalysts have yet to emerge.

Three Major Headwinds for the 2026 Cryptocurrency Market

Declining Retail Trading Enthusiasm: Spot trading volume down over 40% from peak, retail participation continues to decline

Catalyst Vacuum: ETF inflow effects diminish, political tailwinds have been priced in, no new major positives expected

Operational Cost Pressures: Exchanges expanding derivatives and tokenization businesses face increased expenses, with limited short-term returns

Revenue Challenges for Major Digital Asset Exchanges

The largest compliant U.S. crypto exchange remains a core focus of Barclays’ analysis. Although the company is expanding into derivatives and tokenized stock trading, the bank notes it still faces dual headwinds of shrinking spot trading volume and rising operating costs. The report states: “COIN has multiple growth plans and recent acquisitions, which may start to become more influential.” Nonetheless, analysts have lowered the target price to $291 and maintain a more conservative earnings outlook.

This target price reduction reflects Barclays’ concerns about the short-term profitability of the largest compliant U.S. crypto exchange. Spot trading fees still constitute over 60% of its total revenue. When this core business faces structural decline, whether new business growth can compensate remains a key concern for investors. The expansion into derivatives requires substantial technological investment and regulatory compliance costs, while tokenized asset trading is still in its infancy with limited market size.

Robinhood faces similar challenges but perhaps more severe. Unlike the largest compliant U.S. exchange, Robinhood’s crypto business is just one part of its diversified product portfolio; stock and options trading remain the main revenue sources. This diversification was advantageous during the bull market but could lead to a lower priority on crypto investments during the 2026 downturn, further weakening its competitive position in the space.

Regulatory Tailwinds Have Been Fully Priced In

One area that could stir the 2026 crypto market is regulation. Barclays emphasizes that the upcoming CLARITY bill will help define the boundaries between digital commodities and securities, clarifying which U.S. agency (SEC or CFTC) is responsible for regulating certain assets. While not guaranteed to boost the market, the bill could reduce operational uncertainty for crypto companies and investors. If passed, it would facilitate clearer product launches, especially in the tokenized asset space.

However, Barclays’ analysis carries a key warning: following recent elections, the U.S. political environment has become more favorable toward digital assets, but these optimistic sentiments are already reflected in the market. Any legislative movement, such as the CLARITY bill, must pass the Senate and withstand potential legal challenges to have a tangible impact. This means that while regulatory clarity is a long-term positive, it may not translate into actual trading volume growth in 2026.

Even more concerning is that the marginal effect of regulatory tailwinds is diminishing. The approval of Bitcoin ETFs in 2024 was a landmark regulatory breakthrough, triggering billions of dollars in inflows. Subsequent waves of regulatory easing are unlikely to have the same market impact as the initial breakthrough. This “regulatory fatigue” could make it difficult for the CLARITY bill, even if passed, to recreate the market frenzy seen during ETF approvals.

Tokenization Won’t Save the Near-Term Fire

Tokenization continues to attract attention from both crypto-native and traditional financial firms. Companies like BlackRock (BLK) and Robinhood (HOOD) are experimenting with products in this area. However, Barclays warns that the trend remains in its early stages and is unlikely to materially impact earnings in the 2026 crypto market. This judgment is based on multiple barriers facing tokenized assets: immature technological infrastructure, ongoing regulatory framework development, and the time needed for institutional adoption.

The promise of tokenization is to bring traditional assets like real estate, stocks, and bonds onto the blockchain, enabling 24/7 trading and instant settlement. However, realizing this vision requires overcoming legal, technical, and market acceptance hurdles. Even if the CLARITY bill passes, building a complete tokenized asset trading ecosystem will take years. For exchanges urgently seeking revenue growth, tokenization is a promising long-term direction but cannot address the near-term fire in the 2026 crypto market.

Transition Year or Turning Point?

In summary, 2026 may be a transitional year for cryptocurrencies. With retail activity declining and no immediate tailwinds, companies are focusing on long-term investments such as tokenized financing and regulatory upgrades. Whether these investments will bear fruit next year or further down the line remains uncertain. Barclays’ forecast reminds investors that the crypto market is not only about upward cycles; cyclical adjustments and downturns are natural parts of a healthy market. The 2026 crypto market may lack major catalysts, but this quiet period could also be a buildup phase before the next wave of explosive growth.