CGV Research | Crypto Prediction Markets Outlook: If stablecoins solved "payments," can prediction markets solve "truth"?
- CGV FoF
- Oct 9, 2025
- 7 min read
Published by: CGV Research
Authors: Shigeru
Over the past two years, prediction markets have become one of the most controversial yet most promising "real-world applications" in crypto. Inside the crypto space, leading platforms like Polymarket and Kalshi have taken off, with trading volumes climbing rapidly. Outside the space, however, prediction markets are still viewed as gambling, making it difficult for them to enter mainstream investors' asset allocation frameworks.
This raises a key question: Can prediction markets, like stablecoins, truly break out of the crypto bubble and become the next cornerstone connecting crypto with the real world - an internet-scale fintech product?
I. Current landscape: thriving inside, perception gap outside
Why is the same market hot within crypto but barely noticed outside? Prediction markets are a typical case of "hot inside, cold outside."
On one hand, enthusiasm within crypto continues to grow.
Platforms represented by Polymarket, Kalshi, and Manifold have built relatively stable traffic and narratives in the crypto community.
Polymarket, with its clean interface and USD stablecoin settlement, has become a key venue for discussing the U.S. election, macroeconomic data, and crypto airdrops. In 2025, Polymarket's cumulative trading volume surpassed 7.5billion, withAugustaloneexceeding7.5 billion, with August alone exceeding 7.5billion, withAugustaloneexceeding618 million, driven mainly by political events and macro forecasts. During the 2024 U.S. election, Polymarket priced Trump's win probability at 99% by 1:30 a.m. ET, while Fox News didn't call it until 1:47 a.m., with other media taking even longer. Persistent arbitrage and rising marginal costs of price deviations from fair value make errors in prediction markets brief and easy to correct. Manifold, with its "social + prediction" light-entertainment model, has attracted over 200,000 participants, becoming a "new voting pool" for users to gather information and express views. However, in 2025 Manifold's daily active users once fell to a historic low of 886, reflecting retention challenges.
Meanwhile, Kalshi has surged as a compliant platform. By September 2025, its trading volume reached $1.3 billion, capturing 62.2% of global prediction market activity and dominating sports prediction markets.
On the other hand, public understanding remains limited.
The general public often equates prediction markets with "gambling," overlooking their value in information aggregation and probability pricing. Even as mainstream U.S. media occasionally cite Polymarket data, social perception still pegs prediction markets as a niche toy.
For example, The Economist in 2025 noted that low liquidity deters large investors, undermining credibility. The lack of clear compliance labels and authoritative endorsement keeps prediction markets outside mainstream awareness. Despite Kalshi recording $208 million in trading during March Madness 2025, the public still viewed it as gambling rather than an information tool.
II. Cross-audience expansion: multidimensional integration and innovation
To truly break out, prediction markets need more than technical upgrades; they need new narratives and entry points. Politics, macroeconomics, entertainment/sports, and even native Web3 ecosystems are potential catalysts.
Anchor to real events: traffic gateways in politics, economics, and entertainment
Prediction markets are naturally tied to real-world events, making politics, economics, and sports/entertainment ideal wedges to cross the chasm.
Politics: Events like U.S. elections, the Brexit referendum, or bill-passage odds are hard for traditional polls to predict accurately. With price-based mechanisms, prediction markets can offer more real-time, truer probability indicators. For example, in 2025, a Polymarket on the Fed's rate decision saw over $50 million in volume, with users hedging risk by betting on a "25 bps hike."
Macroeconomics: CPI releases, nonfarm payrolls, and Fed decisions are key for institutions and investors. Prediction markets can serve as a real-time expression of "market expectations." During the 2025 yen carry trade unwind, oracle-based prediction markets anticipated a 15% yen depreciation weeks in advance, while equities reacted more slowly.
Entertainment and sports: Oscars, the World Cup, and the Olympics draw mass attention and can naturally funnel non-crypto users to prediction platforms. For instance, on Kalshi in 2025, a market on Taylor Swift and Travis Kelce's engagement saw a trader buy contracts at $0.37 and eventually profit $50,000, gaining broad media coverage and pulling in entertainment fans.
Media coordination: from data source to authoritative indicator
To cross over, prediction markets must become cited data sources.
Poll alternative: Some U.S. media already use Polymarket prices as a complement or even substitute for polls. Unlike polls that rely on questionnaires, prediction market prices reflect "real-money bets," giving them stronger signal value. In 2025, Yale Insights noted rising citation of political prediction markets but cautioned about accuracy.
Instant probability indicators: If news reports cite real-time market probabilities - e.g., "Markets show a 72% chance the Fed will hike in September" - it will boost prediction markets' authority and reach. For example, Barron's in 2025 directly used Kalshi data as an expectations indicator for March Madness.
Deep Web3 integration: derivatives and social loops
DeFi integration: Prediction markets can become part of on-chain derivatives, offering hedges against interest rates, policies, or token listings. In 2025, Polymarket's integrations with DeFi enabled on-chain hedges in a Bitcoin price prediction market, reaching $430 million in volume.
SocialFi linkage: KOLs can launch markets for fans to participate in, forming a flywheel of revenue and traffic. In 2025, emerging platform Melee raised $3.5 million and launched "viral prediction markets," allowing frictionless creation of social prediction events.
RWA combination: Prediction markets are akin to derivatives and could merge with RWA-linked derivatives to become alternative on-chain trading tools. Kalshi's 2025 RWA integration attempts led its volume to outpace Polymarket's for three consecutive weeks.
Tokenizing private companies: Tokenizing private firms is difficult - founder resistance, legal risk, fake "governance" rights, and poor liquidity. Prediction markets can more easily meet similar needs by creating markets on company events (e.g., probability of a financing round), letting users speculate indirectly on private assets without complex tokenization.
Product and UX upgrades: user-friendly and lower barriers
AMM + NFT-ization: Using AMMs and NFT-ified shares to make "buying a view" more intuitive, lowering comprehension barriers. Manifold's NFT-ified prediction shares in 2025 attracted new users, though overall engagement still needs work.
Lightweight entry points: Telegram bots, WeChat mini-programs, etc., can make participation as simple as launching a poll, speeding non-crypto user onboarding. Polymarket's mobile optimization in 2025 boosted user growth by 20%.
III. Bottlenecks: regulation, liquidity, and narrative
Every boom hits bottlenecks. The problem isn't whether prediction markets have value, but whether they can sustain it. Regulation, liquidity, and narrative are the three hurdles.
Regulatory gray zone: the boundary between gambling and derivatives
Prediction markets straddle the line between gambling and financial derivatives. In the U.S., CFTC approvals for Kalshi set a precedent, but most platforms still operate in gray areas. In September 2025, the CFTC approved Polymarket's return to the U.S., but Commissioner Kristin Johnson warned of insufficient guardrails and limited visibility into markets.
Hong Kong and Singapore may present regulatory openings, but policies remain unclear. Regulatory uncertainty limits institutional participation. For example, in 2025, PrizePicks obtained NFA FCM registration to launch a compliant prediction market, yet the industry still faces legal challenges that may reach the Supreme Court.
Liquidity shortfalls: small pools and weak network effects
Most liquidity is concentrated in a few hot events; long-tail markets lack depth, making prices less informative. Without large inflows, prediction markets struggle to form the network effects needed for information aggregation.
Reports in 2025 show low liquidity prevents fulfillment of large hedging demand, hurting accuracy. For instance, long-tail markets on Manifold have fewer than 1,000 active users - insufficient for complex predictions.
Narrative bias: shifting from "gambling" to "information markets"
The public still sees prediction markets as "gambling," not "probabilistic information markets." Without authoritative endorsements, that narrative is hard to flip quickly. Media in 2025 emphasized that while volumes are surging, regulatory gaps undermine public trust.
IV. Outlook: mainstream integration and long-term positioning
Stablecoins solved payments; the next validation of crypto's real-world value may be prediction markets. Maybe not immediately, but the direction is clear.
To truly cross over, prediction markets must outgrow the crypto echo chamber and embed in broader narratives.
Media datafication: become a standard real-time expectations indicator
Prediction markets should become a common probability metric in reporting, gradually acclimating the public to market-implied expectations. In 2025, KPMG reported continued growth in prediction markets' popularity, with media citations up 30% year-over-year. Going forward, Polymarket and Kalshi data will increasingly appear in mainstream news and financial programming. To maintain credibility, reporters covering elections, macro events, or sports will need to reference prediction market probabilities.
Regulatory evolution: compliance opens the door to institutions
The CFTC's tech upgrades and feedback mechanisms are expected to wrap up by October 2025. Polymarket's U.S. return and Kalshi's regulatory wins signal clearer pathways for event listings, settlement, and institutional participation. This is not just about "legalization" - it's a prerequisite for institutional capital.
Institutionalized liquidity: professional capital and trading teams
As rules clarify, professional capital will enter first. From the launch of dedicated prediction market funds managing tens of millions, to quant firms creating prediction-market desks (not only market making but directional trading), the trend is visible. SIG's market-making for Kalshi is a clear precedent.
Product financialization: derivative-ization and terminal integration
The end state may be a new kind of derivatives exchange. Experts project that by 2030, global prediction markets could reach $1 trillion. Meanwhile, prediction market data will interface with professional terminals like Bloomberg and Refinitiv, offering real-time quotes, history, alerts, charts, and native APIs for Excel/Python and newsroom systems. Editors and traders will handle prediction probabilities like stock prices, rates, and FX.
In sum, the true value of prediction markets isn't just letting people bet - it's giving information a price. Stablecoins have validated the real-world value of "payments"; the next validation may be "pricing information." Today's prediction markets resemble the early stablecoin era. Those who recognize their potential may secure a foothold on crypto's next foundational pillar.
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About Cryptogram Venture (CGV):
CGV (Cryptogram Venture) is a crypto investment institution headquartered in Tokyo, Japan. Since 2017, its fund and predecessor funds have participated in investments in over 200 projects. Since 2022, CGV has invested in and incubated the licensed Japanese yen stablecoin JPYW, making an early move in the crypto stablecoin sector. Starting in 2024, CGV has expanded into the tokenized equity and RWA markets, participating in private placements of projects such as Nabate (NA) and Victory Securities (8540.HK). Currently, CGV also has branches in locations such as Hong Kong and Silicon Valley.
Disclaimer:
The information and materials introduced in this article are sourced from public channels, and our company does not guarantee their accuracy or completeness. Descriptions or predictions involving future situations are forward-looking statements, and any advice and opinions provided are for reference only and do not constitute investment advice or implications for anyone. The strategies our company may adopt could be the same, opposite, or unrelated to the strategies readers might speculate based on this article.
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