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Prediction markets look to institutional investors for next phase of growth
Kalshi said institutional trading volumes have risen 800% in six months as it targets larger clients with customized block trades.
- Kalshi executed its first customized block trade in recent weeks and is actively targeting larger institutions, Andy Ross, head of institutional business at Kalshi, told Reuters. Annualized trading volumes tripled to $178 billion over six months, with institutional investor volumes growing 800%.
- After explosive growth among retail traders over the past year, prediction markets are now pivoting toward deep-pocketed financial institutions with firepower for large block trades. Big-ticket clients purchase contracts tied to monthly scheduled events, such as payroll data releases, with some exceeding several million dollars.
- Infrastructure firms including Clear Street, Jump Trading, and London-based Marex recently struck partnerships with Kalshi and Polymarket to connect institutional clients to event contracts. Asaf Meir, CEO of Solidus Labs, stated hedge funds need 'a more nuanced and surgical way to express their views in other derivative markets that they can't access in traditional financial venues.'
- Analysts warned prediction markets must address significant liquidity constraints to attract major institutional capital. Edward Ridgely, co-founder of Stand, noted some top Polymarket markets hold only about $30 million in total liquidity, observing 'there's institutional interest, but there's not institutional activity.'
- If prediction markets overcome liquidity challenges, the institutional pivot could reshape how hedge funds and asset managers hedge near-term risks, potentially rippling through traditional finance. Toni Gemayel, head of prediction markets at Coinbase, told Reuters prediction markets 'are increasingly being treated as a legitimate alternative asset class.
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Prediction markets look to institutional investors for next phase of growth
Prediction market platforms including Kalshi are making a big push to attract top institutional investors and hedge funds, a move that could ripple through traditional finance even as the trading sites still have a ways to go to gain broad use.
·New York, United States
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