Prediction Markets, Sports Betting Thorns in Bitcoin’s Side
Posted on: February 2, 2026, 05:00h.
Last updated on: February 1, 2026, 08:48h.
- Growth of speculative markets may be pulling attention away from Bitcoin
- Demand for instant gratification luring some bettors, traders to more speculative markets
- Many crypto investors were early adopters of sports wagering and prediction markets
Despite having an ally in the Trump Administration and a variety of macroeconomic factors that appear to be supportive, Bitcoin shed nearly 12% of its value for the week ending Feb. 1. As of late Sunday, the largest cryptocurrency by market capitalization needed to gain nearly $50,000 to reclaim its all-time.
Some experts believe part of the problem facing Bitcoin is younger market participants’ increasing desire to make a quick buck, which leads them to markets that can provide instant gratification such as prediction markets and sports betting.
Over the past 5 – 10 years, the supply of speculative markets has expanded materially,” notes Greg Cipolaro of NYDIG. “Online sports betting, online casino gambling, in-game live wagering, leveraged single-stock ETFs, ultra-short-dated options, and prediction markets have all grown, driven by a combination of market demand and regulatory liberalization.”
Said another way, while Bitcoin is widely viewed as an asset class with increasing support in the professional investment community, it’s also fighting for attention among retail investors — many of whom are sports bettors and, more recently, devotees of prediction markets.
Bitcoin Has New Rivalries
Perhaps surprising to some market observers, Bitcoin now has new rivals in the form of iGaming, prediction markets, and sports wagering and that competition is market by decreasing attention spans and crimped capital positions.
Even with its recent slide, Bitcoin traded above $77,000 late Sunday, making it difficult for the vast majority of retail traders to buy a single coin. On the other hand, for significantly less capital, they can “scratch the itch” via event contracts, internet casinos or sports betting. Moreover, those alternatives provide the instant gratification many of young retail traders are looking for.
“In financial markets, this shift is evident in the growing participation in activities such as those mentioned previously, as well as meme stock trading, options trading among retail investors, communities like WallStreetBets, and even billion-dollar lottery participation,” adds Cipolaro. “While these activities differ in form, they share a similar payoff profile: limited downside per attempt, low probability of success, and highly skewed potential returns.”
He adds that faster- moving markets reward immediacy while punishing patience. As it relates to Bitcoin, that’s potentially problematic because as the cryptocurrency has matured, its biggest gains have accrued over holding periods measured in months and years.
Bitcoin At a Disadvantage
Data confirm that most retail bettors and traders lose money on prediction market, sports wagering and zero-dated options, but as NYDIG’s Cipolaro points out, those market participants love the “rapid reinforcement” and instant resolution provided by those venues.
That feeds into the notion that the lines between investing and wagering are blurring and that the former is increasingly gamefied to the detriment of retail investors. Bitcoin may be getting caught up in the instant gratification wave.
“In financial markets, these dynamics disadvantage assets like bitcoin that, while capable of being traded at high frequency, are best suited to be held over long periods of time,” concludes Cipolaro. “As attention and capital increasingly gravitate toward faster, more reactive markets, slower-moving investment theses struggle to compete for mindshare, even when their long-term return characteristics remain intact.”
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