Expansion into Prediction Markets
Mike Novogratz-led Galaxy Digital is in discussions to provide liquidity for prediction market platforms Polymarket and Kalshi, Bloomberg reported Monday. The digital asset investment management firm is currently conducting small-scale experimentation with market-making on prediction markets.
Novogratz told Bloomberg the firm plans to provide broader liquidity on the platforms in the future. The move signals Galaxy Digital's expansion into the burgeoning prediction market sector, increasingly recognized as a new frontier combining information and finance. Prediction markets let users trade yes or no contracts with prices reflecting market-implied probability of outcomes.
Market Landscape and Growth
Polymarket and Kalshi dominate the field with around $42.4 billion in cumulative volume between them. Decentralization-focused Polymarket initially led after gaining traction around the U.S. election results. CFTC-regulated Kalshi has overtaken it in monthly volume since September.
Both platforms have recently secured high-profile partners through solitary and collaborative agreements. Galaxy Digital, Google Finance and the U.S. National Hockey League chose to partner with both platforms. The partnerships demonstrate growing institutional interest in prediction markets.
Evolving Use Cases and Competition
Bernstein analysts wrote in a client note earlier this month that prediction markets are evolving to be broader information markets. Demand now spreads beyond politics and sports into economics, culture, corporate activity, and financial indicators. The expansion reflects maturing use cases for prediction markets.
Other major players in crypto and finance are looking to enter the space with their own platforms. Gemini and CME Group recently announced such plans, respectively. The competitive landscape continues to expand as established firms recognize prediction market potential.
Impact of Liquidity Provision
Galaxy Digital's liquidity provision would strengthen market depth and efficiency on both platforms. The firm's involvement adds credibility to the sector while potentially improving price discovery mechanisms. Market-making activities typically reduce spreads and increase trading volume.