Galaxy Digital to Supply Liquidity for Kalshi and Polymarket’s Prediction Markets
Galaxy Digital is preparing to enter the crypto prediction-market sector as a liquidity provider, according to Bloomberg.
Key Takeaways
- Galaxy Digital plans to provide liquidity for crypto prediction platforms such as Kalshi and Polymarket.
- Major trading firms including Jump Trading and SIG are also entering the sector, increasing competition.
- Regulatory uncertainty remains, but prediction markets continue to expand and attract institutional participation.
The move signals a new phase for an industry that has quickly shifted from niche speculation to a competitive marketplace attracting institutional trading firms.
Prediction markets allow users to trade on outcomes of real-world events ranging from elections to sports results. These platforms match buyers and sellers directly rather than acting as bookmakers, which means they rely heavily on third-party liquidity to keep markets functioning when activity spikes. Galaxy Digital plans to supply that liquidity, reinforcing price discovery and tightening spreads.
Mike Novogratz confirmed that the company has already carried out limited market-making activity and intends to expand to a broader role. If the rollout proceeds as expected, Galaxy could become one of the most active liquidity sources supporting event-driven trading.
Expanding competition among liquidity firms
For a long time, prediction markets operated without much attention from large financial players. That shifted recently as trading volumes expanded and the sector began to mature.
Susquehanna International Group was the first major institution to maintain a consistent presence. More recently, Jump Trading has started operating on Kalshi. AQR Capital Management co-founder Cliff Asness has also expressed interest in entering sports-oriented prediction activities.
The arrival of multiple firms has turned liquidity provision into a competitive field, with each participant looking to secure influence across the most active markets.
Kalshi and Polymarket respond with infrastructure upgrades
The two dominant platforms — Kalshi and Polymarket — are working aggressively to strengthen their market depth.
• Kalshi operates an internal liquidity desk that functions independently from client data to prevent conflicts of interest.
• Polymarket returned to the U.S. this year after purchasing QCX, a federally regulated derivatives exchange, for $112 million, allowing it to operate under federal rules after previously leaving the market because of CFTC penalties.
To accelerate activity, both platforms have launched incentive programs aimed at traders who continuously provide liquidity in individual markets.
Regulation remains unresolved
Event-based trading continues to occupy a regulatory gray zone. Under the previous U.S. administration, the federal stance toward prediction markets became more permissive, creating room for the sector to expand. State regulators have challenged some Kalshi listings involving sports events, arguing they qualify as gambling products. Kalshi disputes that interpretation and maintains that it offers financial contracts regulated by the CFTC, not gaming services.
So far, the CFTC has not taken additional action on the matter.
Political figures have become increasingly involved in the industry. Donald Trump Jr. now advises both Kalshi and Polymarket. Trump Media & Technology Group recently launched its own prediction platform, Truth Predict, following negotiations led by CEO Devin Nunes.
Why Galaxy’s involvement matters
Until recently, prediction markets relied mostly on retail activity and algorithmic traders. The entrance of firms like Galaxy Digital, Jump Trading and SIG marks the point at which liquidity becomes institutionalized. As markets expand, pricing accuracy, execution quality and spread efficiency will depend on large liquidity providers rather than casual participants.
The competition to dominate liquidity could become the defining factor in determining which prediction-market platform ultimately leads the sector.
The information provided in this article is for educational purposes only and does not constitute financial, investment, or trading advice. Coindoo.com does not endorse or recommend any specific investment strategy or cryptocurrency. Always conduct your own research and consult with a licensed financial advisor before making any investment decisions.
Alex is an experienced financial journalist and cryptocurrency enthusiast. With over 8 years of experience covering the crypto, blockchain, and fintech industries, he is well-versed in the complex and ever-evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His approach allows him to break down complex ideas into accessible and in-depth content. Follow his publications to stay up to date with the most important trends and topics.
