How does liquidity accumulate? Analyzing the patterns behind Polymarket's 290,000 market data

Based on an in-depth analysis of approximately 290,000 market data points on the Polymarket platform, the predicted market liquidity distribution exhibits highly concentrated characteristics. The study finds that liquidity is heavily clustered around a few popular events, while many markets face liquidity exhaustion. This article reveals the true landscape of Polymarket liquidity through six core findings and provides deep insights for participants based on crypto data, helping them explore prediction market opportunities across different timeframes.

Liquidity Polarization

The liquidity distribution in prediction markets shows a clear two-pole polarization. Data indicates that only 505 contracts (a tiny fraction of the total contracts) have trading volumes exceeding $10 million, yet these contracts account for 47% of the platform’s total trading volume.

This means that the vast majority of prediction market contracts are in a “born and dead” state, with liquidity spotlighted on a small number of major events with strong narratives. This phenomenon reveals that in decentralized order books, markets lacking volatility and immediate feedback are almost impossible to sustain.

Short-term Markets: The “PVP Battlefield” with Scarce Liquidity

On Polymarket, short-term markets (less than 1 day cycle) account for 22.9% of the total markets. However, among these, 63% of active short-term markets had zero trading volume in the past 24 hours. These markets are likened to MEME coins, with most having less than $100 in liquidity. Categorically, short-term markets are almost entirely dominated by sports and crypto prediction categories. However, the average trading volume for short-term crypto predictions is only $44,000, far below the $1.32 million seen in sports.

This indicates that short-term prediction trading is more akin to high-risk gambling rather than an effective price discovery tool. For users seeking to profit from short-term crypto price fluctuations, prediction markets may not provide sufficient liquidity to support their strategies.

Long-term Markets: The “Reservoir” of Big Funds

In stark contrast to short-term markets, long-term markets (over 30 days cycle), though fewer in number, attract the most capital deposition. The average liquidity in these markets reaches $450,000, while markets with cycles under 1 day average around $10,000.

In long-term markets, US politics is the most popular category, with an average trading volume of $28.17 million and an average liquidity of $811,000. This data suggests that large funds prefer to position themselves in long-term predictions, viewing them as macro hedging tools rather than engaging in short-term speculation.

The “Dumbbell” Structure of Sports Markets

Sports prediction is one of the main sources of daily active users on Polymarket, accounting for about 40% of total active users. However, the trading volume distribution in sports markets shows a distinct “dumbbell” shape. On one end, ultra-short-term predictions (less than one day) have an average trading volume of $1.32 million; on the other, ultra-long-term predictions (over 30 days) average as high as $16.59 million. Mid-term predictions (7-30 days) have an average trading volume of only $400,000.

This data indicates that users involved in sports predictions are either seeking “immediate results” or placing “high bets” on entire seasons, with relatively low interest in mid-season event contracts.

The “Cold Start Dilemma” of Emerging Markets

An interesting finding is that not all long-term markets automatically gain good liquidity. Take the real estate prediction market as an example: despite being a high-certainty, over-30-day cycle market, its performance lags behind political prediction markets of the same period. This reflects the “cold start dilemma” faced by emerging asset classes (especially niche and specialized categories). Markets like real estate require participants to have higher professional knowledge, and the lack of frequent event-driven volatility reduces speculative capital enthusiasm.

Under these combined factors, these relatively niche markets fall into an awkward situation where professional players lack counterparts, and amateur players dare not enter.

Geopolitics: The Fastest-Growing Emerging Sector

A notable trend is that “geopolitics” has become the fastest-growing prediction market sector. Although the total number of historical event contracts in this sector is only 2,873, currently active contracts reach 854, accounting for 29.7% of the total, the highest among all sectors.

This indicates that the number of new contracts related to “geopolitics” is rapidly increasing, making it one of the most urgent topics for prediction market users. Recent leaks of internal addresses related to several “geopolitical” contracts suggest that this field is marked by both high attention and controversy.

Performance of Prediction Market Tokens

The activity in prediction markets is also reflected in the price performance of related tokens. As of January 9, 2026, according to Gate data, representative tokens like POLY have maintained active trading volumes over the past 24 hours. Price data shows that prediction market tokens tend to correlate with overall crypto market sentiment and traditional financial market trends. On the Gate platform, these tokens often exhibit specific trading activity periods linked to the announcement of major prediction event results.

Recent data shows that token price fluctuations on prediction market platforms do not always synchronize with platform trading volume growth, indicating that the market is still assessing the long-term value capture potential of such platforms. Currently, the valuation of these tokens more reflects market expectations for the prediction sector as a whole rather than the platform’s financial performance alone.

Data Insights and Platform Evolution

The analysis of prediction market liquidity reveals a core insight: liquidity is not evenly distributed like sunlight but is concentrated on a spotlight of major events. Whether as a “high-frequency casino” in sports or as a “macro hedge” in politics, their ability to capture liquidity depends on either providing immediate dopamine feedback or offering deep macroeconomic betting opportunities.

Markets lacking narrative density, with long feedback cycles and insufficient volatility, are destined to struggle in decentralized order books. Polymarket is evolving from a utopian “predict everything” model into a highly specialized financial instrument.

For participants, recognizing this is far more important than blindly chasing the next “100x prediction.” In this arena, value can only be discovered where liquidity is abundant; in areas with scarce liquidity, only traps remain. This may be the greatest truth about prediction markets that the data reveals.

As prediction markets become more integrated with crypto data, this field is expected to develop into an important indicator reflecting collective intelligence, providing unique market sentiment insights for crypto market participants.