What Are Crypto Prediction Markets?

Crypto prediction markets let users trade contracts tied to the outcome of future events. They're not new, but crypto and fintech platforms have made them mainstream. In this guide, we’re exploring everything you need to know about prediction markets, how they work, and the best prediction market apps.

What is a prediction market?

A prediction market is a marketplace where participants trade contracts linked to future outcomes.

Each contract typically represents a binary outcome, such as “Yes” or “No”, and pays out a fixed amount if the outcome occurs. The price of the contract reflects the market’s aggregated belief about the probability of that outcome.

For example, if a contract priced at $0.30 pays $1 if an event happens, the market is implying a 30% probability.

Unlike traditional gambling, prediction markets:

• Allow users to buy and sell positions before resolution

• Have prices that continuously update based on supply and demand

• Aggregate information from many participants into a real-time probability estimate

What can I bet on in a prediction market?

In unregulated markets, pretty much anything you can think of.

Is Jesus returning before the release of GTA 6? Who knows, but you can bet on it.

Predictions markets cover a huge range of event types. Common categories include:

• Politics and elections: Presidential elections, parliamentary outcomes, referendum results, leadership contests, and policy decisions.

• Macroeconomic indicators: Inflation releases, GDP growth, unemployment rates, interest rate decisions, and recession forecasts.

• Financial markets: Stock index levels, commodity prices, cryptocurrency price targets, and corporate events such as mergers or earnings thresholds.

• Sports and entertainment: Sports outcomes, award winners, and media events.

• Technology and science: AI milestones, space launches, or regulatory approvals.

Some platforms also allow niche markets, such as weather events, public health metrics, or geopolitical developments.

Regulation strongly influences what can be listed. For example, CFTC-regulated platforms in the US face some restrictions on political markets.

How do prediction markets work?

Prediction markets function more like financial exchanges than casinos.

Contracts and pricing

Each market lists one or more contracts that pay out a fixed amount (typically $1) if a specific outcome occurs. Users trade these contracts in an open market.

The contract price represents the implied probability of the event. A $0.65 price implies a 65% chance of occurring.

Trading mechanics

Participants can:

• Buy contracts if they think the market underestimates the probability

• Sell or short contracts if they think the market overestimates the probability

• Exit positions before the event resolves by selling to another trader

Unlike fixed-odds betting, there is no house setting prices. The market itself sets prices through order books or automated market makers.

Market resolution

When the event occurs, the platform determines the outcome using predefined data sources. Winning contracts settle to their payout value (e.g., $1), and losing contracts settle to $0.

Profits or losses depend on the difference between the purchase price and the settlement value, or the price at which the position was closed.

Do prediction markets support crypto?

Yes. The majority of prediction market platforms have added support for crypto.

The most commonly supported cryptocurrencies are stablecoins like USDT and USDC, but many other popular cryptocurrencies, including BTC, SOL, and ETH, are also supported.

As well as this, most prediction market platforms have a crypto predictions category where you can bet on the outcomes of crypto events, like price increases and decreases, similar to options contracts.

What are the best crypto prediction market apps?

A few platforms currently dominate the prediction markets scene: Kalshi, Polymarkets, and Robinhood.

Kalshi

Kalshi is a US-based, CFTC-regulated derivatives exchange focused on event contracts. It offers popular markets like politics, sports, culture, crypto, economics, and more.

Kalshi uses a traditional order book, similar to financial exchanges. Contracts settle in USD, and users fund accounts via bank transfers. Because Kalshi is regulated, it provides strong legal clarity and consumer protections.

Polymarket

Polymarket is a crypto-native, decentralized prediction market built onchain. Markets include politics, crypto, stocks, tech, and culture. 

Polymarket uses tokenized outcome shares and automated market makers. Users trade using stablecoins, and markets are governed by decentralized oracles.

Robinhood

Robinhood has recently explored prediction-style markets within its brokerage ecosystem, often framed as event-based contracts or simplified derivatives.

Robinhood’s approach is designed for mainstream retail users, offering simplified interfaces and integration with traditional brokerage accounts. This reduces friction compared to crypto platforms but limits market variety.

Don’t forget the tax bill…

Prediction market winnings are taxable, but don’t panic. Koinly can help you easily calculate your PnL from popular apps like Polymarket to make reporting your gains or losses simple. Try it free today.