While prediction markets are having a massive moment in the FIFA World Cup is the ultimate catalyst while Poly market and cay are seeing an explosion in trading volumes as every match becomes a tradable event.
Now combined volumes on both platforms nearly doubled for me to reach a record $44 billion last month and on poly market alone wagers on who will take home soccer's biggest prize have drawn $4 billion in trading.
With Spain currently the front runner here to break down where the smart money is flowing as Adam Morgan McCarthy, who is head of research at low tech.
Happy Friday.
Adam, thank you so much for joining me.
Well, a lot of anticipation ahead of this weekend's games and there's no secret that prediction markets are booming here.
So when it comes to volume as well as extra time, break it down for us.
What's happening when it comes to prediction markets.
Yeah, thanks for having me, Remy.
I'm glad to be here.
Um, I think it's been a really interesting World Cup for the prediction markets, you know, we saw them both kind of boom, as you mentioned there from the end of May into June, and that's been carrying on as well.
Kalshi's kind of, I think, nearly 70% towards its total volume last month, and of course it's only the 17th of July.
But uh, you know, the really interesting thing that we've seen on the kind of football or soccer, as you guys might say over there, is that the extra time in the knockout stages, which isn't really a feature of NFL or American sports, has been a huge driver for kind of, you know, volatility and volume.
So, you know, even the final minutes of games, the knockout rounds, we've seen the tie swing from, you know, 70% in favor of England to win maybe with 25 minutes to go to all of a sudden, Argentina are winning that way, you know, a couple of minutes left on the clock and extra time is really kind of hyper focused way of doing that, you know, you've got 30 minutes to kind of figure out the score or else it goes to penalties and it's led to a huge increase in volume and how the how the exchanges handle that extra time and the markets is actually also leading to a different kind of outlook and volume.
Yeah, and Adam, while I have you here, the big question is why are some of these prediction platforms suddenly resonating so deeply with traders, say, compared to traditional sports books?
Yeah, I think, you know, I've kind of thought about the question a lot.
I think, you know, part of it is UI, um, it's a lot kind of cleaner, it's nicer, it's more modern.
Uh, part of it is that, you know, there's, there's a kind of simple binary there.
Some of the sports books in Europe and in other places, they make it a little bit more complex and sort of spread betting and things that kind of obfuscate what you're getting on the binary yes nos have been really fun for people to trade and really kind of interesting.
But there's also some signal there as well, beyond all that kind of, you know, ease of use and kind of, uh, you know, modern tech, that there has been signal in terms of things we've seen and And politics in the US election in 2024 and other places we're seeing, you know, kind of when it comes to geopolitical stuff around the globe and, you know, South America and in Europe, we've seen that there is actually kind of valuable signal in these markets, which is kind of helped benefit them a lot. and Adam, while I have you here, I do want to address what we're seeing in the crypto markets, but we have to keep in mind that markets across the board, across all asset classes have been volatile this week given everything that we're seeing in AI as well as geopolitics.
But as prediction markets as well as. suck the air out of the room.
Traditional crypto ETFs are also seeing weak demand.
So how much of this general fatigue is actually tied to a lack of underlying product innovation and would you say stalled regulatory frameworks when it comes to digital assets.
Yeah, I think, you know, I think we're overplaying it if we say that there's kind of a stall in the underlying market.
There's still a lot of people doing some great things.
And you know, we even the prediction markets we're talking about polymarket, you know, was built on polygon.
Um, there is a kind of crypto element to some of the blockchain tech to some of the things that are happening there.
Um, but you know, I think this is more of a broader market malaise, as you say, and you know, we've got to look at the time of year we're in.
Uh, a lot of people would rather be on the beach, uh, than talking about markets, I think, and you're seeing that in, in the volumes as well.
The, you know, the liquidity has dried up across crypto markets, which doesn't help.
So when you get a little bit of a kind of pin pop like this, uh, AI stuff this week and over the last few weeks with, uh, you know, the memory stocks and things like that, it's going to suck down the broader market.
It's going to kind of bring everything down.
And that's like, you know, highlighted in, you look at hyperliquid today, one of the biggest innovations in crypto, the decentralized exchange that's, you know, drawing all the attention with its weekend markets on oil during the Iran conflict earlier this year, that, that's even seeing a 13, 14% decline this week, just because there's no liquidity there.
This is the market has dried up a little bit.
It's not the say the product or the underlying, you know, the utility of the, of the.
Exchange is is is seeing a drop.
It's, it's just the way the market is right now.
I don't think that that's going to be a long term thing, but I think there's definitely room for more volatility with less liquidity and that we could see that over the coming weeks and August has tended to be quite volatile for crypto over the last few years.
We had the uh Japan carry trade kind of unwind a few years, years ago, and you know, last year as well, there was a little bit of an uptick involved.
So I wouldn't be shocked to see a little bit more of the downside in the coming weeks as we head towards Jackson Hole and then back into September. and indeed we are counting down to Labor Day here in the US, but at the same time there is still a lot going on.
So as we head into the rest of this quarter as well as the second half of 2026 when it comes to crypto and prediction markets, what are you paying attention to right now?
Why?
Yeah, I think one of the key things I'm going to be looking at on the crypto side of things is, you've probably spoken about a lot in the last few weeks as well as a strategy and Michael Sailor looking at the earnings they'll be coming out towards the end of this month or early August.
Um, be interested to see what the kind of narrative is around there.
I think they've put out a kind of A few, uh, you know, floating balloons to see what people are thinking in the market.
They've changed their narrative a little bit on their, on their position for, you know, how they manage that treasury and the flexibility.
The flexibility is a really important thing for the broader market and the institutional players.
I don't know how much the retail Bitcoin focus people who bought into the strategy because of their kind of focus on Bitcoin will kind of, you know, respond to that.
I think we'll see more kind of messaging from them then it could be interesting to see how that earnings call goes.
And of course you've got Coinbase and the other exchanges that are going to be delivering earnings at the start of August.
I'll be keeping an eye on those, seeing what they're doing in reaction to volumes coming up on about 12 months since Coinbase kind of really made it planted its flag as being the everything exchange, you know, they've been challenged a lot by by Robin Hood.
They've launched their own chain and at the same time basis chain has kind of had some difficulties.
So I'll be watching those two earnings pretty closely to see how those kind of players react because they're.
They're real kind of trendsetters in the crypto market and the mood kind of can tilt on how they, how they perform.
Well, Adam, a lot to keep our eyes on as we head into the rest of the summer.
So thank you so much for joining us and have a great weekend.
Thank you.
You too.
Bye-bye.
