Prediction markets draw Wintermute as crypto firms chase liquidity 

Wintermute has entered prediction markets as a liquidity provider, bringing professional market-making capacity to a sector that has grown into a major venue for trading real-world event risk.

Wintermute said the firm will quote both buy and sell prices across active event contracts on leading prediction market platforms. The company said its role will focus on improving liquidity in markets that have drawn heavy user demand but still face limits around execution depth.

Wintermute targets event-contract liquidity

According to Wintermute, prediction markets now require the same trading infrastructure used across digital asset markets. The firm cited execution, custody, collateral management, and risk controls as areas where its existing crypto systems overlap with event-contract trading.

The company has handled more than $5 trillion in cumulative trading volume across more than 50 digital asset venues. Wintermute said that experience enables it to support two-sided markets where users need tighter pricing and deeper books.

Jake Ostrovskis, Wintermute’s head of OTC trading, said prediction markets show demand traits seen in larger asset classes, while their liquidity conditions remain less mature. He said sustained two-sided liquidity can reduce spreads, support larger trades, and improve the information carried by market prices.

Prediction markets draw institutional attention

Industry data cited in the announcement showed prediction markets have surpassed $60 billion in trading volume in 2026. Monthly activity has reached between $20 billion and $25 billion, according to the same figures.

Polymarket’s 2024 U.S. presidential election contracts helped prove the size of user demand. The platform processed more than $3 billion in volume tied to that election, according to market data cited in the report.

Kalshi has also become a central player in the sector. The CFTC-regulated exchange saw annualized trading volume rise from $52 billion to $178 billion in six months through early 2026, according to figures cited in the report. More than 90% of U.S. prediction market activity is now attributed to Kalshi.

At the same time, investor interest has moved beyond early-stage curiosity. Kalshi recently raised $1 billion in a Series F round at a $22 billion valuation, according to the report.

Tighter spreads could change market use

For users on platforms such as Kalshi and Polymarket, Wintermute’s participation could affect how large trades are placed. The firm said professional market makers can help reduce bid-ask spreads and make it easier to execute larger positions.

The issue has mattered because many prediction markets have historically had thin order books. In contracts tied to events such as central bank decisions, users often faced weak depth and poor pricing when placing meaningful trades.

A report cited in the announcement estimated that about $40 million in arbitrage was extracted on Polymarket between April 2024 and April 2025. Wintermute’s entry suggests that professional firms see those pricing gaps as tradable opportunities.

Regulators have started paying closer attention to the sector’s growth. The CFTC issued an Advanced Notice of Proposed Rulemaking on March 16, 2026, focused on manipulation risks and event-contract oversight.

State lawmakers have also moved into the debate. At least 11 states have advanced legislative measures targeting prediction markets, according to the report.

Tax policy could add another pressure point. One estimate cited in the report placed potential forgone tax revenue from unregulated prediction markets at $600 million.