Robinhood sees surge in bitcoin, gold prediction markets as traders move beyond sports
The company's head of futures and prediction markets said bitcoin, gold and oil contracts are among its fastest-growing prediction markets.
Robinhood is experiencing a surge in demand for prediction markets focused on bitcoin, gold, and oil, as traders shift their focus away from sports and elections. Price volatility contracts tied to these assets are among the fastest-growing products on the platform, according to JB Mackenzie, VP and GM for futures and prediction markets at Robinhood.
While sports remains the largest product, Mackenzie noted a growing shift towards financial markets. He explained that price volatility contracts, such as those for bitcoin, crude oil, and gold, are now dominating the marketplace and are the fastest-growing products. Prediction markets allow traders to buy contracts based on whether a specific event will occur, with prices reflecting the market's implied probability of the outcome.
For example, a contract might ask if bitcoin will trade above a certain price at a specific time, enabling traders to take a position without buying the cryptocurrency itself. Robinhood entered the prediction markets business through a partnership with Kalshi, a federally regulated exchange, and has since made event contracts a significant part of its trading platform.
As sports contracts face legal challenges from state gambling regulators, financial contracts could offer another avenue for growth. Mackenzie highlighted that Robinhood's largest event contract in September was tied to the Federal Reserve's interest rate decision, reflecting a growing interest in economic events. Traders are also becoming more interested in shorter contracts, particularly in the crypto market, where some products now settle in as little as 15 minutes.
Mackenzie compared these 15-minute contracts to zero-day options, which expire on the same trading day, noting that both can lead to rapid losses. He emphasized that prediction markets are helping Robinhood attract customers to its other businesses, with users often exploring stocks, cryptocurrencies, futures, and options after engaging with event contracts.
Some even discover the platform's individual retirement accounts. Mackenzie stated that prediction markets could be the company's fastest-growing segment among its 11 businesses, each generating over $100 million in annual revenue.
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