Currently, participants in the cryptocurrency market are shifting en masse towards prediction markets. Behind this shift lie both opportunity and burnout. Since its peak in October last year, the price of Bitcoin has fallen by nearly 30%, and many tokens have performed even worse. With their binary odds, real-world stakes, and swift outcomes, prediction markets offer the same speculative crowd a more direct dopamine hit—no lengthy roadmaps, just immediate “yes” or “no” answers.
Prediction markets are no longer a niche. According to data, the weekly nominal trading volume on platforms like Polymarket and Kalshi has surged from $5 billion in June last year to nearly $60 billion in January this year.
Market data confirms this trend. Last year, downloads of cryptocurrency exchange applications declined significantly, while prediction market apps saw growth against the trend. Market intelligence firm Sensor Tower data shows that Polymarket’s installations climbed from 30,000 in January last year to over 400,000 in December; Kalshi’s installations skyrocketed from 80,000 to 1.3 million during the same period. Meanwhile, downloads for Binance, the world’s largest cryptocurrency exchange, more than halved.
However, behind the decline in downloads lies a deeper existential crisis for token economies. Nikshep Saravanan, a former cryptocurrency trader, bluntly stated that cryptocurrencies are too easily manipulated, with liquidity withdrawals and fraudulent behavior, and people have grown somewhat weary. Crypto traders haven’t left the scene entirely but have shifted direction. Both Polymarket and Kalshi allow betting on Bitcoin’s future price, and crypto-related contracts have become the second most active trading category on Polymarket, up from fourth place a year ago. According to Dune data, the nominal trading volume for crypto-related contracts on these two platforms has grown nearly tenfold. Even CoinMarketCap, once the “stronghold” of token frenzy, has now added a prediction markets section.
Crypto infrastructure companies are actively embracing this trend. Coinbase (COIN) launched a prediction market feature in December last year, with trades routed through Kalshi. Gemini (GEMI) and Crypto.com are also advancing their respective projects, with Crypto.com offering white-label services for external institutions including Trump Media. Max Branzburg, Head of Consumer and Business Products at Coinbase, stated they have observed significant user enthusiasm, with users wanting to trade “everything” on a single platform.
Capital flows also signal growth. Owen Lau of Clear Street estimates that Coinbase could generate $7 billion in revenue from this business in 2023; according to his calculations, Robinhood’s (HOOD) annualized revenue in this field is already close to $3 billion. A Mizuho survey found that Coinbase and Robinhood users are nine times more likely to engage with prediction platforms compared to the general population.
