Retail crypto trading at Gemini plummets to lowest point in three years
The decline in retail trading activity at Gemini reflects broader challenges facing competing cryptocurrency exchanges, prompting several platforms to increasingly rely on prediction market offerings to compensate for diminished trading volumes.
The cryptocurrency exchange Gemini has disclosed its weakest quarterly retail trading performance in three years, even as the platform experienced growth in aggregate crypto trading activity.
Overall spot trading volumes expanded by 18% compared to the second quarter, reaching $4.5 billion, based on data from Gemini's third-quarter earnings disclosure. Trading volume from institutional clients jumped 26% to reach $3.9 billion, while retail trading volume declined by 14% to $600 million, marking the weakest performance since the third quarter of 2023.
According to Gemini, the quarterly growth in spot trading volumes was "supported by increased institutional Zcash activity and expanded affiliated market-making," though the company offered no explicit explanation for why retail trading experienced a downturn.
In spite of the weakness in retail trading, Gemini's overall exchange revenue grew by 7% compared to the prior quarter, reaching $13.4 million, driven by institutional revenue that more than doubled during the period. Retail traders continued to represent the platform's primary source of exchange revenue, accounting for close to three-quarters of the total.
Prediction markets emerge as growth driver for crypto exchanges
Several cryptocurrency exchanges have similarly disclosed weaker crypto trading performance during the latest quarter.
Coinbase experienced softer performance across both retail and institutional segments, with consumer spot trading volumes declining 9% from the preceding quarter to $23.4 billion. Chief financial officer Alesia Haas of Coinbase noted that "continued growth in prediction markets helped offset softer crypto trading activity."
Robinhood saw its crypto revenue decline 55% on a year-over-year basis to $120 million, though this was counterbalanced by event-contract revenue that surged sixfold to $173 million.
Gemini similarly benefited from its proprietary prediction exchange platform, Gemini Predictions, which generated revenue that rose 52% on a quarter-over-quarter basis to $796,000, although this increase proved insufficient to compensate for weakness in other business segments.
Expansion plans for prediction markets at Gemini
The company disclosed more robust prediction-market performance as it entered the fourth quarter, with average daily active traders during October running approximately 50% higher than the third-quarter average.
Close to one-third of new traders participating in prediction markets were completely new users to the Gemini platform, representing more than double the percentage observed in Q3.
The platform is additionally pursuing opportunities to offer its event contract products through third-party distribution channels. A nonbinding agreement signed in August with Apex Fintech Solutions would establish Gemini Titan as the exclusive platform for cryptocurrency event contracts that are distributed via Apex's futures brokerage infrastructure to its brokerage customer base, pending the execution of definitive agreements.
The company has scheduled its Q3 earnings conference call for Friday.