Prediction markets grow amid cryptocurrency pullback
Polymarket achieved a $9 billion valuation through a major investment, highlighting the rapid maturation of prediction markets. This surge occurs as broader cryptocurrency markets experience a downturn. Competition intensifies between Polymarket and Kalshi, with varying volumes in sports and politics betting.
The cryptocurrency market faced a pullback on the day in question, with Bitcoin declining 2.6% alongside slips in traditional indices like the S&P 500 (down 0.28%) and Nasdaq (down 0.44%). Gold rose 0.97%, serving as a safe haven amid worsening consumer sentiment from a New York Fed survey that indicated higher inflation forecasts. Memecoins dropped 7.7%, while the AI sector showed resilience with a 4.2% decline.
Despite this, prediction markets demonstrated strong momentum. Polymarket announced a $2 billion strategic investment from Intercontinental Exchange (ICE), the parent of the NYSE, at a $9 billion post-money valuation. Earlier rounds included $150 million at $1.2 billion led by Founders Fund and $55 million at $350 million led by Blockchain Capital. This underscores the sector's appeal to institutional investors.
Polymarket and Kalshi are vying for dominance. Kalshi has focused on publicity, recruiting influencers and integrating with platforms like Bloomberg and Robinhood. It launched crypto initiatives, onboarding John Wang as head of crypto. Reports suggest Kalshi attempted to undermine Polymarket, including efforts involving Antonio Brown to disparage it and its founder Shayne Coplan.
Volume data reveals Kalshi leading overall with $956 million last week (66% market share) compared to Polymarket's $464 million (32%). However, Kalshi's volume is dominated by sports betting at $877 million (92%), boosted by partnerships for NFL and college football markets. Excluding sports, Polymarket holds 85% share versus Kalshi's 15%. Polymarket captures over 90% of political betting volumes, while 50% of its activity is sports-related. Sports betting's broader appeal may challenge Polymarket's position, especially without matching Kalshi's distribution through apps like Robinhood.