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Prediction Markets Liquidity In Focus

Prediction Markets

Liquidity

Written by Laurens Fraussen , Adam Morgan McCarthy

16/02/2026

    Welcome to the Data Debrief!

    Welcome back to the Data Debrief! 

    Prediction markets captured mainstream attention throughout 2025 as Polymarket processed over $2 billion in election-related volume. The post-election collapse from $1 billion to $200 million in open interest exposed fundamental questions about sustainability.

    • Weekly prediction markets volumes are holding steady at $4b

    • 75% of users trade under $100 while only 3% exceed $1,000, creating user acquisition challenges

    • Short-dated prediction markets compete directly with established derivatives offering superior liquidity

    Prediction Markets Liquidity In Focus

    Prediction markets captured headlines throughout 2025 with Polymarket’s election coverage and Kalshi’s regulatory victories, but a closer examination of trading infrastructure reveals a fundamental disconnect.

    Polymarket’s user distribution reveals extreme retail concentration, with 61.48% of users operating in the $0-$50 bucket. An additional 12.53% trade between $50-$100, meaning nearly three-quarters of platform users maintain positions below $100. Only 2.99% of users exceed $1,000 in position size, with a mere fraction operating above $10,000.

    Consider crypto-native prediction markets on Polymarket versus Deribit options for similar exposures. Polymarket’s “BTC Up or Down Feb 15” market recorded $764k in total volume, while the “BTC Up or Down Feb 16” market generated $546k. ETH markets showed similar patterns, with $428k for Feb 15 and $333k for Feb 16. The volumes appear meaningful in isolation, but comparing them to short-dated options reveals the competitive challenge prediction markets face against established options infrastructure.

    Deribit’s BTC options expiring February 16, 2026 alone held open interest distributed across dozens of strikes from $60k to $74k, with call open interest concentrated around $68-70k strikes, and put interest clustered near $64-66k. Single strikes frequently exceeded $10-20m in open interest, dwarfing Polymarket’s entire “BTC Up or Down Feb 16” market by 20-40x per strike.

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    Data Used In This Analysis

    Our industry-leading research is the direct result of combining our proprietary data with world-class in-house experts. Bringing the very best of Kaiko’s people and data together, we unlock the unique insights that form the basis for our discoveries and analysis. We believe in doing so, our data speaks for itself, helping both our clients and the wider industry get a better understanding of the crypto ecosystem, and the evolving trends and patterns in motion at a regional and global scale.

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      Written by Laurens Fraussen