The rise in speculation driving prediction markets and leveraged betting in various sectors is not reckless, it is rational, according to CoinFund managing partner David Pakman.
In a presentation during Consensus Hong Kong, Pakman reframed the behavior as “economic nihilism,” a calculated response by Generation Z to structural barriers to wealth creation.
His case began with housing. For Generation X and Boomers, he said, the average home costs about 4.5 times their annual salary. For Generation Z, it’s closer to 7.5 times.
That shift, Pakman argued, effectively excludes young people from the housing market, long considered the cornerstone of middle-class wealth. Only 13% of 25-year-olds own their homes, more than half of Gen Z investors now own cryptocurrencies, he said.
With few traditional options, Pakman said younger generations are turning to high-risk bets, including memecoins, perpetual futures, zero-expiry options and prediction markets, not out of ignorance but as a strategy.
“It’s becoming really rational to think that if the typical forms of long-term wealth creation are closed to you, a small chance of a big return outweighs the near certainty of a slow decline,” he said.
He pointed to crypto perpetual contracts. These products, futures contracts that do not expire, recorded a nominal volume of $100 trillion last year, according to data it shared.
Prediction markets also skyrocketed, from $100 million to $44 billion in just three years. While some experts use them to make political predictions, Pakman said 80% of the activity is sports betting. Dune’s data paints a similar picture, with $1.8 billion of the $2 billion in daily prediction market volumes focused on sports at the beginning of the month.
Pakman urged builders to confront it with better tools.
“In crypto, it is up to us to create products that allow for the expression of risk more transparently, that are fairer, have lower fees, and can be more transparent in both risk disclosure and payment capabilities,” he said.
