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The volume of prediction markets has reached an all-time high! Kalshi and Polymarket contributed a total of $2 billion.
According to a report by Bloomberg, the prediction market platforms Polymarket and Kalshi have reached new historical peaks in their volume, with nominal volume surpassing $2 billion for the first time in the week ending October 19, exceeding the frenzied trading seen during last year's U.S. presidential election. This surge is one of the clearest indicators of the growing attention on prediction markets, attracting financial giants including CME Group Inc. and Intercontinental Exchange Inc., who are actively seeking to enter this emerging hotspot market. The main drivers of volume are the popularity of sports betting and the general increase in wagering on political, cultural events, and economic indicators.
Volume Hits Record: Sports Betting Becomes Core Driver of Rise
According to the public data compiled by Dune Analytics user dunedata, the nominal volume of Kalshi and Polymarket surpassed $2 billion for the first time last week.
· Beyond the presidential election: This figure easily surpasses the crazy volume of transactions that the two platforms experienced when they first entered the mainstream financial spotlight during last year's U.S. presidential election.
· Sports betting contributes significantly: This rise is largely attributed to the popularity of sports betting on the Kalshi platform, headquartered in New York. Kalshi offers betting services nationwide under its financial license, despite scrutiny from state betting regulators.
· Data Comparison: Last week, sports-related betting was the primary category on both platforms, with Kalshi's volume reaching $867 million and Polymarket at $415 million. The return of college football games and the NFL season significantly boosted the trading volume on both platforms, especially on Kalshi, where the partnership with trading app Robinhood Markets Inc. brought in new users.
Prediction Market: The Blurred Boundaries of Financial Speculation and Information Democratization
The prediction market platform allows investors to bet on the probability of real-world events occurring by purchasing contracts that will settle at zero or 1 dollar after the event is resolved.
· Supporters and critics: For supporters, prediction markets are the next step in the democratization of trading; they are “crowdsourced probability engines” that can reveal market sentiment faster than polls or analysts. For critics, they are merely financialized entertainment, built on the same adrenaline loop that fuels “Meme stocks” and cryptocurrencies.
· Definition of nominal volume: The figures on Dune capture nominal volume, which is a measure of calculating the unilateral quantity of each transaction to make the trading volume of the two exchanges more comparable.
Regulation and Competition: Financial Giants Accelerate Market Competition
The explosive rise of prediction market has attracted the attention of traditional financial giants and accelerated competition and expansion under the regulatory environment.
· Regulatory victory and expansion: Last year, after winning the lawsuit against its regulator, the Commodity Futures Trading Commission (CFTC), Kalshi was able to legally open betting on the presidential election, greatly boosting the growth of the two platforms. Subsequently, another market participant opened sports betting after Trump won the election, and Kalshi followed suit.
· Traditional giants entering the game: Exchange giant CME plans to launch contracts related to sports events, while the parent company of the New York Stock Exchange, ICE, recently announced a $2 billion investment to acquire a stake in Polymarket.
· Polymarket's compliance efforts: Polymarket was previously banned from serving US customers due to legal disputes with US regulators, but is now planning to re-enter the US market and has recently acquired the derivatives exchange QCX, which is under CFTC regulation.
Conclusion
The record trading volume of Polymarket and Kalshi clearly indicates that the prediction market is rapidly transitioning from an emerging field to a financial market with enormous potential. The rise driven by sports betting, coupled with strategic moves from traditional financial giants like ICE and CME, suggests that the prediction market is heading towards mainstream acceptance and further financialization. Despite challenges from state-level regulators and pressures on the technical side, this market blurs the line between speculation and information, and is expected to become a faster, more transparent barometer of market sentiment.
Disclaimer: This article is for informational purposes only and does not constitute any investment advice. The cryptocurrency market is highly volatile, and investors should make decisions with caution.