Galaxy opened a prediction market OTC desk for large investors, starting with a $10 million event swap with crypto hedge fund Arca.
Galaxy Digital, a crypto financial services company founded by Bitcoin bull Mike Novogratz, launched a new OTC derivatives desk to give large investors private access to prediction market trades.
The company said in a Tuesday press release that the offering will run through its Global Markets trading desk and give hedge funds, family offices and other institutional clients access to prediction market liquidity at larger sizes.
This desk will initially support non-sporting event prediction contracts offered on Kalshi and Polymarket, which include economic, political, and geopolitical event contracts, among others. The solution is also expected to include more platforms in the coming period, though no more details were provided.
Galaxy also said the product can also pair prediction market trades with hedges in equities, commodities and other assets, letting clients build broader strategies around a single event.
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Galaxy Targets Institutional Prediction Market Liquidity
Galaxy claims it has already done an $10 million trade with Arca, a crypto hedge fund, related to the passage of the Digital Asset Market Clarity Act, also known as the CLARITY Act, by Congress.
The trade was structured as a bilateral OTC event swap, a private version of the event contracts already traded on prediction markets. Arca would hedge against the possibility that the legislation doesn’t pass and negatively impacts its crypto positions through the event swap.
Galaxy is betting that institutional investors want prediction market exposure, but not necessarily through public order books.
“Event-driven markets are becoming core to how sophisticated investors express macro views, and they deserve institutional infrastructure to match,” Jason Urban, global co-head of digital assets at Galaxy, said in the release.
Urban added Galaxy can act as a principal counterparty that can “warehouse risk” and build hedged strategies across asset classes.
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