First, the AI trade stole bitcoin's thunder. Now, the cryptosphere is losing some of its most-loyal traders to bets on soccer matches and congressional elections.

This year's shift into highflying artificial-intelligence stocks (and out of bitcoin and other popular digital currencies) steepened a yearlong crypto slump. But it has been individual traders' recent affection for prediction markets that is extending the crypto winter even as AI stocks wobble.

Prices on bitcoin, the world's biggest digital currency, recently traded around $79,000. Even with a rebound in the last two weeks because of the Treasury's expanded bond buyback program, it is still roughly 37% below its record of more than $126,000 in October 2025.

Many of the same traders who fueled crypto's past rallies are now spending more time and money on event-based contracts. These contracts offer yes-or-no wagers on everything from the outcome of state elections to the Federal Reserve's next interest-rate move to who will be the next James Bond-and are easier to trade than trying to make sense of crypto's boom-and-bust cycles, some traders say.

"I just felt like I had better luck at the roulette table with prediction markets versus crypto," said Cathy Mallebranche, a 36-year-old trader and fashion stylist in New York.

Mallebranche started trading crypto during the pandemic, when prices were still rocketing higher. She viewed crypto as a lucrative opportunity to turn a quick profit, funneling as much as $25,000 across various digital currencies. The rally didn't last forever, and she ended up losing more than $10,000 as the market for digital assets collapsed in 2022-23.

As the 2024 presidential election approached, Mallebranche shifted her focus to prediction markets, placing wagers that better aligned with her passion for politics and sports and gave her more confidence in her betting strategy. She still has about $4,000 invested in digital currencies.

The share of crypto traders using prediction markets is projected to rise from 22% in the past year to 27% in the coming year, according to a recent study by Langston Co., which polled 2,030 U.S. adults and teens. The survey found that 61% of crypto users view digital currencies primarily as a speculative tool or a way to make quick money, underscoring how risk-seeking investors are steadily migrating to prediction-markets platforms.

"The appeal is not this long-term conviction that crypto is going to be this currency of the future," said Tom Anderson, a partner at Langston. "Rather, it's more about short-term upside, and prediction markets provide that same short-term upside."

Some traders say that prediction markets offer a less risky, more-level playing field than the crypto market.

"It feels like you don't need to rely on a pump and dump," said Andrew Kim, a 33-year-old financial analyst in New York.

Kim said he grew frustrated with the proliferation of crypto scams and sophisticated trading algorithms, both of which have helped drive wild price swings. Earlier this year, Kim said he sold roughly $100,000 in bitcoin and ether.

Kim said he has been betting on sports-related wagers, as well as those related to the economy and politics, on Kalshi. While his gains have been smaller than his previous crypto winnings, he says that the calm is worth it.

One factor behind the asset classes' diverging fortunes: Prediction markets have supplanted crypto as the biggest winner of the Trump administration's policies.

The crypto industry has hoped that the Clarity Act would spur wider adoption of digital assets, but the legislation remains stalled over ethics language that would bar government officials and their immediate families from profiting off digital assets.

Since Trump's return to the White House, the Commodity Futures Trading Commission has taken a supportive and permissive approach to prediction-markets platforms. In a series of legal actions this year, the agency has sued states to affirm its exclusive jurisdiction over prediction markets.

Still, prediction markets are dealing with their own regulatory fight. Kalshi and Polymarket, along with the CFTC, are locked in a battle about whether prediction markets' operations violate state gambling laws. Polymarket has a data partnership with Dow Jones, the publisher of The Wall Street Journal.

For others, their reason for moving to prediction markets is brutally direct: Crypto, they say, is no longer cool.

Nopakorn Hansanant, a San Francisco-based sales associate, invested in bitcoin and ether during the pandemic but eventually unloaded his entire position in 2021 after finding them too volatile and difficult to understand. A year later, he discovered prediction markets while pursuing his Ph.D. in Texas.

The prediction platforms he uses have become hot spots for individual investors. As for crypto, he said the crowd that brought so much excitement and passion to digital assets is leaving, too-just as the suits from Wall Street and the hedge-fund world invade.

"I feel like everyone is trying to get in on this, so it seems like a big boom," Hansanant said. "Just like when crypto had that boom and all these new coins were coming up."