Barclays expects a more tepid year for crypto in 2026, with trading volumes trending down and investor enthusiasm waning. In a wide-ranging year-end report published Friday, the bank flagged a difficult backdrop for digital asset exchanges like Coinbase (COIN), citing unclear catalysts for renewed activity and a slow start to token adoption efforts.

Retail-facing exchanges, which benefited from surging trading interest during the crypto bull runs of prior years, are now facing a more subdued environment. Barclays analysts noted that trading volume in spot markets — key revenue drivers for companies like Coinbase and Robinhood (HOOD) — has cooled sharply. Without a clear spark to reignite demand, volumes may remain muted.

"Spot crypto trading volumes [...] appear to be trending towards a down-year in FY26, and it is not clear to us what might reverse this trend," the analysts wrote.

Crypto markets tend to move on big events: policy announcements, product launches or political changes. Barclays pointed to past bursts of activity, like the March 2024 spot bitcoin exchange-traded funds (ETFs) inflows or the pro-crypto presidential win in November as key drivers of short-term spikes. But in the absence of such events, the bank sees structural growth as lacking.

One area that could stir the market is regulation. Barclays highlighted the pending CLARITY Act, legislation that would help define the line between digital commodities and securities and clarify which U.S. agency — the U.S. Securities and Exchange Commission (SEC) or the smaller Commodity Futures Trading Commission (CFTC) — regulates which assets. While not a guaranteed market mover, the bill could ease operational uncertainty for crypto companies and investors alike. If passed, it could open the door for clearer product launches, especially in tokenized assets.

Coinbase remains a focal point in Barclays’ analysis. While the company is expanding into derivatives and tokenized equity trading, the bank sees headwinds from shrinking spot volumes and rising operating costs.

"COIN has a number [of] growth initiatives as well as recent acquisitions that could start to become more impactful," the report stated. Nevertheless, analysts revised their price target for the stock down to $291, citing a more conservative earnings outlook.

Tokenization continues to gain attention from both crypto-native and traditional finance firms. BlackRock (BLK), Robinhood (HOOD), and others have been piloting products in this space. But Barclays cautions the trend is early-stage and unlikely to materially impact earnings in 2026.

Meanwhile, the U.S. political environment has turned more favorable for digital assets following recent elections. However, Barclays sees much of this optimism already priced into the market. Any legislative movement, like the CLARITY Act, would need to pass through the Senate and survive possible legal challenges before having any practical impact.

In sum, 2026 may be a transitional year for crypto. With declining retail activity and no immediate tailwinds, companies are focusing on long-term bets like tokenized finance and compliance upgrades. Whether those investments bear fruit next year or further out remains uncertain.