The rise in speculation that is driving prediction markets and leveraged betting across various sectors is not reckless, it is rational, according to David Pakman, managing partner of CoinFund.
In a presentation at Consensus Hong Kong, Pakman called this behavior “economic nihilism,” a calculated response by Generation Z to structural barriers to wealth creation.
His case started with housing. For Generation X and baby boomers, he said, the average home costs about 4.5 times their annual salary. For Gen Z, it’s closer to 7.5 times.
According to Pakman, this change effectively excludes young people from the real estate market, long considered the cornerstone of middle-class wealth. Only 13% of 25-year-olds own their homes, and 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-day expiration options and prediction markets, not out of ignorance but as a strategy.
“It actually becomes rational to think that if the usual means of long-term wealth creation are closed to you, a small chance of a large return outweighs the near certainty of a slow decline,” he said.
He highlighted perpetual crypto contracts. These products, futures contracts that do not expire, saw a notional volume of $100 trillion last year, according to data he shared.
Prediction markets have also exploded, from $100 million to $44 billion in just three years. While some experts use them for political prediction purposes, Pakman said 80% of the activity is in sports betting. Dune data paints a similar picture, with $1.8 billion of $2 billion in daily sports-centric market prediction volumes at the start of the month.
Pakman urged manufacturers to respond with better tools.
“It’s up to us in crypto to create products that allow for the expression of risk more transparently, that are fairer, have lower fees, and can be more transparent in disclosing risk and payment capabilities,” he said.
