Prediction Market Volume Hits $63.5B Amid Extreme Crypto Fear

VADODARA, February 10, 2026 — Global prediction market trading volume exploded to approximately $63.5 billion in 2025, marking a 4x year-over-year increase from $15.8 billion in 2024, according to a recent report by Web3 security firm CertiK. This daily crypto analysis reveals that while platforms like Kalshi, Polymarket, and Opinion concentrated liquidity, up to 60% of the volume may represent wash trading driven by incentives rather than organic demand.

Investigation: The $63.5 Billion Volume Surge and Its Composition

CertiK's forensic data, reported by Decrypt, identifies a massive liquidity grab in prediction markets last year. The $63.5 billion total represents a 302% increase from 2024's $15.8 billion. According to the report, major platforms dominated activity. Kalshi, Polymarket, and Opinion served as primary liquidity hubs.

Consequently, the surge lacked steady organic demand. Incentives and specific events primarily drove the volume. The report estimates wash trading—where traders execute circular trades to secure rewards—accounted for as much as 60% of the total. This activity artificially inflates liquidity metrics without corresponding genuine market participation.

Market Context & Historical Precedent

Historically, DeFi sectors experiencing rapid volume growth tied to incentives face sharp corrections when those incentives sunset. The 2021 yield farming boom, for instance, saw total value locked (TVL) collapse after emission schedules ended. Underlying this trend, prediction markets now mirror that pattern with inflated volume masking underlying fragility.

In contrast, the broader crypto market exhibits extreme fear, with the Crypto Fear & Greed Index at 9/100. This sentiment divergence—speculative prediction market activity amid widespread caution—creates a unique market structure. Related developments include Tether's strategic LayerZero investment and JPMorgan's reduced Coinbase target, both occurring within this fearful macro environment.

Technical Architecture & Price Action

Market structure suggests the volume surge created a significant Fair Value Gap (FVG) between reported activity and sustainable demand. The 60% wash trading estimate acts as a massive order block that, if removed, could invalidate current liquidity levels. Price distortion remained minimal despite inflated volume, indicating prediction accuracy algorithms functioned reliably—a positive technical signal for core protocol utility.

, analyzing Fibonacci retracement levels from the 2024 volume base shows the surge extended beyond the 2.618 level, typical of parabolic, incentive-driven moves. The $15.8 billion level now serves as critical historical support. A return to this zone would confirm organic demand failed to keep pace with incentive-driven growth.

By The Numbers

Why It Matters

This volume explosion matters because it tests prediction market sustainability. Wash trading artificially boosts metrics, potentially misleading institutional allocators assessing DeFi sectors. If incentives disappear, a liquidity vacuum could form, increasing volatility and undermining price discovery mechanisms essential for accurate predictions.

, reliable prediction accuracy amid inflated volume suggests robust underlying oracle and smart contract architecture—a positive for long-term adoption. This divergence between surface metrics and core functionality highlights the need for forensic on-chain analysis over raw volume data.

Expert Commentary

"The 4x volume increase signals strong interest in prediction markets as a DeFi primitive, but the 60% wash trading estimate reveals significant structural fragility. Market participants should focus on net organic growth after incentive adjustments to gauge true adoption." — CoinMarketBuzz Intelligence Desk

Market Outlook & Price Scenarios

Two data-backed scenarios emerge from current market structure. The bullish case requires sustained organic volume growth above the $15.8 billion base after incentives taper. The bearish scenario involves a rapid volume contraction as wash trading unwinds, exposing an order block imbalance.

• Bullish Invalidation Level: $40 billion in annual volume. Sustained volume above this threshold, with wash trading below 30%, would confirm organic demand growth and invalidate bearish sustainability concerns.
• Bearish Invalidation Level: $15.8 billion. A return to 2024 volume levels would invalidate the 2025 surge, confirming incentive-driven activity lacked lasting demand and signaling a structural breakdown.

The 12-month outlook hinges on incentive program roll-offs. Institutional capital, as seen in the Bank of England's Chainlink tests, may seek more transparent venues. Consequently, prediction markets must demonstrate real utility beyond speculative trading to attract long-term investment.