"Out of sight, out of mind" — Why the 2026 crypto market is in trouble

The annual report recently released by UK investment bank Barclays points out that the current cryptocurrency market is facing an awkward dilemma, best described by an old proverb—“Out of sight, out of mind.” While long-term potential remains, short-term positive factors are scarce, causing the market to fall into a passive situation. The report warns that, without substantial catalysts, the crypto ecosystem may enter an even more sluggish period by 2026.

Spot Trading Volume Plummets, Retail Enthusiasm Becomes a Thing of the Past

According to Barclays’ analysis, the crypto market is experiencing a clear cooling trend. The frenzy of retail investors rushing into trading during the bull markets of recent years has long faded, and spot trading volume—main revenue source for platforms like Coinbase and Robinhood—is sharply declining.

This is not merely cyclical fluctuation but a structural cooling. Investor participation has returned to relatively rational levels, and the market is no longer dominated by short-term speculative sentiment. Barclays analysts straightforwardly state, “FY2026 seems likely to be a year of decline for cryptocurrency spot trading volume, and we have yet to see any clear factors that could reverse this trend.”

This contraction in volume directly impacts trading platforms. While industry leaders like Coinbase are expanding into new areas such as derivatives and tokenized stocks, the dual pressures of shrinking spot volumes and rising operational costs pose significant short-term profitability challenges.

Lack of Short-term Catalysts, Structural Growth Momentum Hard to Find

The crypto market has always heavily relied on “big events” to drive momentum. Looking back at past surges, they often coincided with major policy announcements, product launches, or geopolitical shifts. Barclays notes that in March 2024, the launch of Bitcoin spot ETFs triggered a rush of capital, and last November’s US presidential election, where pro-crypto candidates won, also caused a short-term market spike.

However, these events tend to generate only temporary hype and do not translate into long-term, structural growth. After each short-term stimulus, the market reverts to its fundamentals—this is currently such a reversion period. Looking ahead to 2026, similar short-term shocks are unlikely to be foreseeable, and the market will struggle to reproduce past enthusiasm.

What does the absence of clear catalysts mean? It implies that the market will be forced to face reality: genuine fundamental improvements are needed, rather than relying on event-driven hype. Coinbase’s target price has been downgraded to $291 by Barclays, reflecting a cautious outlook on short-term revenue prospects.

Regulation and Tokenization—Out of Sight, Out of Mind

The report mentions that the US’s proposed CLARITY Act might be one of the few factors capable of changing the game. The bill aims to clarify the classification of digital assets—what qualifies as a “commodity” and what as a “security”—and delineate the regulatory responsibilities of the SEC and CFTC.

If the bill advances successfully, it could indeed provide clearer rules for the industry and pave the way for tokenized asset issuance. But this is a perfect example of “out of sight, out of mind”—regulatory progress involves multiple hurdles and legal challenges, making tangible effects unlikely in the short term, while the industry faces urgent performance pressures.

Tokenization faces similar dilemmas. Wall Street giants like BlackRock and tech firms like Robinhood are actively exploring tokenized finance, but Barclays reminds investors to stay rational: this trend is still in its very early stages and unlikely to bring substantial profits to companies by 2026. Long-term potential exists, but for companies needing operational improvements, the return cycle for these investments remains too long.

Coinbase and Wall Street’s Double Dilemma

As a leading player in the US crypto industry, Coinbase is a focal point of Barclays’ analysis. Although the company is actively expanding into new businesses and making strategic acquisitions, which could gradually bear fruit, it is difficult to fully offset the revenue impact from the weak spot market in the short term. This is a common dilemma faced by many crypto firms: no matter how good the long-term strategy, it’s hard to quickly reverse current financial pressures.

Barclays has lowered Coinbase’s target price to $291, reflecting a cautious attitude toward the company’s recent performance. Despite multiple growth plans, the effectiveness of these initiatives remains to be seen, especially in the context of declining spot trading volumes, and will require time to prove.

2026: Transition or Trap?

In summary, 2026 may be a critical “transition year” for the crypto market. With retail enthusiasm waning and short-term positives absent, companies must shift focus toward compliance upgrades and long-term bets like tokenized finance. But whether these investments will bear fruit by 2026 remains uncertain, as longer incubation periods are needed, and the market is still waiting for answers.

As the saying goes, “Out of sight, out of mind”—while hope for the future exists, it cannot immediately solve the current predicament. Market participants should prepare for a long-term battle.