📊 Polymarket misses historic BTC crash

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Here’s what we got for you today:

• 📉 Bitcoin crashes to $60k in hours

• ✅ Kalshi pushes for margin trading approval

• 💵 Circle and Polymarket announce partnership

• 📈 Market Moves

• 📊 Odds & Ends

Two days ago, Polymarket gave Bitcoin hitting $60K an 8.5% chance. $55K was at 4%. $50K was at 2%. $45K was at 1%. Then Bitcoin fell 12% on Thursday, dropping below $64,000 to its lowest level since October 2024. The $60K market just resolved at 100%.

Prediction markets didn't see this coming. The odds on all the downside targets have exploded since the crash: $55K jumped from 4% to 36%, $50K from 2% to 17%, $45K from 1% to 10%. Millions of dollars in volume flowed in after the move, not before. Combined, these four markets have done over $6.9 million in volume, most of it in the last 48 hours.

The damage across crypto is brutal. Strategy (formerly MicroStrategy), the largest corporate holder of Bitcoin with 713,000 coins at an average cost of $76,000, is now underwater on its entire position. Shares dropped 17% Thursday. Coinbase, Circle, and Robinhood followed it down. Michael Burry, who shorted housing before 2008, warned in a Substack post that Bitcoin's selloff could turn into a "death spiral."

Bitcoin has lost nearly half its value since October's $125,000 high, more than $1.2 trillion in market cap gone in four months. Investors are rotating into traditional safe havens. Gold is up 11% this year; Bitcoin is down 26%. Since February 2025, gold has soared nearly 70% while Bitcoin has fallen 35%.

Washington isn't stepping in. Treasury Secretary Bessent said this week the government can't support crypto in a crash. Trump's Fed chair nominee Kevin Warsh is seen as unlikely to cut rates. And despite the White House's embrace of the industry, crypto legislation remains stalled in Congress. The "digital gold" thesis is being stress-tested in real time, and so far, actual gold is winning.

KALSHI SEEKS MARGIN TRADE APPROVAL ✅

Kalshi’s latest move began as a regulatory request, though it quickly took on broader meaning. The company has asked the Commodity Futures Trading Commission for approval to introduce margin trading. In doing so, it is signaling that prediction markets want to be treated less as a novelty and more as durable financial infrastructure.

Prediction markets allow participants to trade contracts tied to future outcomes, with prices shifting as collective beliefs change. A contract linked to an election result or an economic data release reflects the market’s current sense of likelihood at any given moment. Kalshi operates one of the few exchanges in the United States permitted to run these markets under federal supervision. That regulatory status has shaped its strategy and its effort to appear institution ready.

Margin trading would alter how capital moves through these contracts. Investors could post only a portion of the total value upfront, then settle in full once the event concludes. This structure is standard in futures markets. It is also central to how professional trading firms deploy capital efficiently across many positions.

For hedge funds and asset managers, this distinction matters. Large firms oversee significant pools of capital and rely on leverage to make participation worthwhile. Markets without margin, deep liquidity, and formal risk controls tend to remain peripheral, regardless of how intellectually appealing they appear.

The timing reflects how much prediction markets have changed. Recent election cycles and major global events pushed trading volumes into the billions. What once felt experimental now sits closer to mainstream financial discussion. That growth has created pressure to adopt the tools and structures institutions expect. Margin is one such tool. Governance and surveillance are others.

Regulators are evaluating these requests in a financial landscape already shaped by leverage. Complex products and amplified exposure exist across traditional markets and retail platforms alike. That reality has weakened older distinctions and opened space for arguments that event based contracts belong within the same regulatory logic when offered on supervised exchanges.

Kalshi has worked to align itself with that logic. The company has hired experienced risk management talent and emphasized internal monitoring systems designed to flag unusual trading behavior. These moves are meant to show that leverage would arrive with oversight. They also reassure potential institutional participants who require clear rules and accountability.

Approval would mark a meaningful step forward. Prediction markets would move further away from their reputation as clever side bets. They would move closer to recognition as financial venues where expectations about the future trade using familiar tools. Legitimacy would come through regulation, scale, and operational discipline rather than novelty alone.

POLYMARKET'S LATEST INSTITUTIONAL PARTNER: CIRCLE 💵

Polymarket is switching from bridged USDC to native USDC, backed by a new partnership with Circle. The change means all trading collateral on Polymarket will be issued directly by Circle's regulated affiliates and redeemable 1:1 for US dollars. This represents a more capital-efficient and institutionally aligned setup than the bridged tokens it currently uses.

"Polymarket has been at the forefront of innovation in marrying the speed of information with the speed of markets," said Circle CEO Jeremy Allaire. Polymarket founder Shayne Coplan framed it as infrastructure work: "Using USDC supports a consistent, dollar-denominated settlement standard that enhances market integrity and reliability as participation on the platform continues to grow."

This is the latest in a string of institutional partnerships for Polymarket. Circle joins Intercontinental Exchange and Dow Jones on the list of established financial infrastructure players that Polymarket has aligned with over the past year. For a platform that started as a crypto-native prediction market, the direction is clear: build toward institutional-grade.

The practical impact for users is marginal as USDC is USDC. But for Polymarket's positioning, it matters. With bridged USDC, your collateral is only as safe as the bridge securing it. Native USDC cuts out the middleman as Circle issues it directly on Polygon, and you can redeem it straight with Circle. No bridge risk, cleaner counterparty.

MARKET MOVES 📈

📈 Biggest swing: “Will Bitcoin dip to $60,000 in February” moved 24% → 100% (Polymarket)

💰 Top earner: @weflyhigh - $335,179 24H Profit (Polymarket)

🤔 Weirdest market: “Nothing Ever Happens: February” (Polymarket)

ODDS & ENDS 📊

• Opinion crosses $20B in cumulative notional volume, generating $15M in fees.

• CFTC Chair rebuts Christie's claim on prediction markets' legality.

• Opinion raises $20M as prediction markets keep attracting capital despite crypto downturn

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