Prediction Markets Hit Record Trading Volume as Fragmentation Concerns Mount
Prediction markets hit report weekly buying and selling volumes final week as merchants more and more transfer to wager on main political occasions, crypto-related outcomes, and sports activities markets.
The rising exercise displays rising curiosity in event-based buying and selling throughout a number of sectors. However, this fast growth has additionally introduced renewed considerations over market fragmentation and insider buying and selling.
Prediction Markets Break Volume Records While Trader Gains and Losses Mount
According to Dune knowledge, prediction markets posted a report $3.7 billion in weekly buying and selling quantity final week, marking an all-time high. Weekly notional quantity additionally surged to a brand new report of $5.57 billion.
The acceleration extends a development that began in 2025, when prediction market exercise began to outpace buying and selling volumes in meme cash and non-fungible tokens (NFTs).
User engagement has additionally risen. Weekly lively customers peaked at 335,583 within the first week of January, whereas transaction counts adopted an identical upward trajectory.
Data exhibits that exercise stays fairly concentrated, with three classes accounting for almost all of weekly notional quantity. On Polymarket, buying and selling is primarily driven by political occasions, sports activities, and crypto-related markets. Kalshi has exhibited a comparable sample.
This focus can also be mirrored on the particular person dealer degree. Lookonchain reported {that a} Polymarket dealer “beachboy4” staged a dramatic turnaround, shifting from greater than $6.8 million in losses to roughly $395,000 in revenue after betting on sports activities outcomes.
Over the previous two days alone, the dealer reportedly profited greater than $10.5 million throughout 5 profitable predictions, totally recovering earlier losses.
“That mentioned, his wager sizes have surged — from a number of hundred thousand per wager earlier than to over $3 million on a single wager now” the post added.
However, not all merchants have seen comparable outcomes. On Polymarket, 2 users lost nearly $10 million in lower than a month, highlighting the dangers related to event-based markets.
“2 Polymarket merchants wager closely on sports activities markets at 48¢–57¢, and misplaced practically $10M in lower than a month. 0x4924: 346 predictions, 46.24% win price, -$5.96M in 24 days. bossoskil1: 65 predictions, 41.54% win price, -$4.04M in 11 days At ~50¢ odds, you’re principally flipping a coin. Betting massive simply means shedding quicker,” Lookonchain noted.
Beyond retail customers, main business gamers are additionally shifting to capitalize on the development. Coinbase is reportedly preparing to launch its personal prediction markets. Moreover, a Gemini affiliate has secured regulatory approval to start providing prediction markets to US clients.
Trump Media & Technology Group has likewise signaled intentions to enter the house. In December, Fanatics, a sports activities platform, announced the launch of a fan-led prediction market platform by way of a strategic partnership with Crypto.com.
Growing Concerns Surround Prediction Markets
However, some specialists have raised considerations concerning the surge in markets, calling it the “endgame” for the sector.
Others argue that the variety of markets just isn’t the core situation. Instead, liquidity stays the largest problem going through prediction markets.
“All it will incentivize is only a ton of 0 liquidity markets individuals are spamming to make 5 cents of creator charges,” Alex Finn stated.
Beyond fragmentation, insider buying and selling has emerged as one other urgent concern for prediction markets. A sequence of latest episodes has raised questions on whether or not personal data is shaping market outcomes.
In one case, three wallets collectively recorded income of more than $630,000 on Polymarket after wagering on the elimination of Nicolás Maduro earlier than his arrest was introduced. Elsewhere, a dealer reportedly generated close to $1 million from bets tied to Google’s 2025 “Year in Search” outcomes.
Similar patterns had been noticed round leisure occasions. On Polymarket, customers positioned 27 wagers on Golden Globe Award outcomes, with 26 settling in the money. These unusually correct outcomes have fueled rising considerations that insider information could also be influencing activity on prediction platforms.
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