Prediction markets prepare to invade one of crypto’s biggest and riskiest trades

A competitive landscape is emerging in the United States as prediction markets Kalshi and Polymarket seek to enter the lucrative and volatile world of perpetual futures, commonly referred to as 'perps'. These futures contracts, which do not have expiration dates, have surged in popularity, especially since the return of former President Trump to the political scene. Perpetual futures allow traders to leverage their positions up to 100 times, a feature that has contributed to their rapid expansion. Prior to this surge, such trading options were virtually nonexistent in the U.S., leading many traders to turn to offshore exchanges like Binance and the now-defunct FTX. Currently, perps represent over 70% of trading volume on centralized crypto exchanges, according to data from CoinGecko. In 2025, the trading volume for perps reached an astonishing $61.7 trillion, marking a 29% increase from the previous year, while spot crypto trading volume rose to $18.6 trillion, up 9%. The intersection of prediction markets with leveraged trading could transform how Americans participate in trading based on real-world events. This shift may position these markets in direct competition with established platforms such as Robinhood and Coinbase. However, some analysts express skepticism, suggesting that the integration of prediction markets and leveraged products might increase market volatility and blur the lines between crypto trading and traditional finance. Owen Lau, an analyst at Clear Street, commented on the situation, stating that he does not perceive prediction markets as an immediate threat to existing crypto platforms. He believes this move is a natural extension of services for Kalshi and Polymarket's current clientele, noting that convincing users from established platforms like Coinbase or Binance to switch would be a significant challenge. Dan Dolev from Mizuho believes that the intention behind prediction markets entering this space is more about risk management rather than a direct competitive assault. He highlighted Robinhood's recent launch of a Prediction Markets hub in collaboration with Kalshi, which has quickly become its fastest-growing revenue stream, with over 11 billion contracts traded by more than a million users in 2025. As the landscape evolves, major players like Crypto.com, Coinbase, and Robinhood have formed the Coalition for Prediction Markets, which aims to navigate the complexities of this new trading frontier. However, Dolev cautioned that prediction market providers may eventually face risks of disruption themselves. The potential popularity of perps trading in the U.S. could lead to heightened volatility in certain assets due to the inherent risks associated with leveraged contracts. Lau pointed out that in other countries, the auto deleveraging system employed by exchanges can trigger significant liquidation events, raising concerns among U.S. regulators about the domestic trading of such contracts. The success of these prediction markets will hinge on how they structure their products, including pricing, settlement, and margining strategies. The Commodity Futures Trading Commission (CFTC) has indicated its commitment to creating a framework for 'true perpetual derivatives' in the U.S., a move that will be closely watched by industry stakeholders. As prediction markets come under increased scrutiny, especially following recent allegations of insider trading and data manipulation, their integration with crypto could invite further regulatory examination. If these markets can navigate these challenges successfully, the broader implications for other asset classes could be significant, potentially expanding the concept of perps beyond crypto into traditional markets like the S&P 500 and commodities.