Kalshi Says Market Maker Drove Repeating Crypto Perp Trades After Volume Scrutiny

CoinDesk analyzed public Kalshi trade records from September 17 through September 20 and found that ether trades valued within $2 of $5,499 accounted for approximately $7.7 million, or 57%, of the $13.5 million of activity in its sample.

Bitcoin showed a similar pattern. Two recurring trade sizes worth roughly $2,500 and $5,000 represented 54% of the approximately $8.5 million of bitcoin-perpetual trading CoinDesk sampled.

The concentration matters because reported volume is often treated as a shorthand for market participation and liquidity. High turnover can suggest that traders can enter and exit positions easily, but the headline number alone does not reveal how many independent participants are generating it. That distinction has become increasingly important as prediction-market liquidity attracts more attention from investors and researchers.

The pattern was not confined to four days. CoinDesk examined 46 separate one-hour ether samples between June 19 and September 20 and found recurring fixed-dollar targets in 43 of them. The dominant recurring size represented roughly 45% of value across those samples and exceeded half of sampled volume on 15 dates.

The number of contracts changed as ether’s price moved, but the dollar value remained close to preset amounts. Earlier samples clustered near $4,999, while other recurring targets included roughly $9,999, $3,999, $4,499 and eventually $5,499.

That is consistent with an automated strategy that adjusts contract quantity to maintain a predetermined notional dollar exposure.

Kalshi Says One Market Maker Was Posting Fixed-Size Orders

Kalshi responded on September 22 with a detailed explanation, saying the repeated trades came from one market maker operating under a liquidity program.

According to the exchange, its market-maker programs can pay firms a flat monthly amount for continuously maintaining bids and offers that meet predetermined requirements for size, spread and uptime. The incentive is tied to keeping liquidity available rather than directly generating trading volume.

Kalshi gave a hypothetical example in which a market maker might be required to keep at least $5,000 on both sides of the order book within a specified spread for most of each hour.

If faster traders detect that those quotes have become stale relative to bitcoin or ether prices elsewhere, they can repeatedly trade against the resting market maker. The result could be thousands of trades occurring at nearly identical dollar sizes even though the traders taking the other side are different.

Kalshi said hundreds of distinct takers interacted with the maker behind the activity highlighted in the recent analysis. It also said the takers were consistently faster and profitable, while the maker repeatedly traded at a disadvantage as outside market prices changed.

That explanation fits a familiar market-microstructure pattern. Automated market makers and high-frequency firms constantly update prices, and a slower resting quote can be picked off by faster participants. Similar differences in professional liquidity have already appeared in cross-platform arbitrage involving Kalshi and other prediction-market venues.

Public Trade Data Cannot Independently Confirm Who Was Behind the Orders

There is still an important limitation.

Kalshi’s public trade feed does not identify individual participants. Outside researchers can see trade prices, sizes and timing, but they cannot directly determine whether two trades came from the same account, whether hundreds of separate traders were taking the opposite side or whether accounts share common ownership.

Kalshi says it mechanically prevents self-matching and monitors for coordinated trading between related participants. The company said it found no evidence that the activity involved collusion or wash trading.

Those statements materially weaken the simplest version of the allegation that the repeated prints represented one trader trading with itself. But the account-level explanation remains information supplied by the exchange rather than something independently verifiable from the public dataset.

The distinction resembles other cases where unusual trading patterns can identify something worth investigating without establishing misconduct on their own.

Fee Incentives Add Another Layer to the Debate

The economics of the trading have also drawn attention.

Kalshi says it introduced a temporary fee-rebate program in July for self-clearing members trading perpetual futures. Under that arrangement, qualifying members receive monthly rebates equal to the perpetual trading fees they paid, effectively creating a temporary fee holiday.

CFTC records also show updates to Kalshi’s perpetual fee schedule and temporary perpetual fee-rebate program were certified on September 16.

However, Kalshi says a separate filing referring to 0.3-basis-point taker fees and negative 0.3-basis-point maker fees is not currently live and would require another public exchange notice before taking effect.

That distinction matters because zero or extremely low transaction costs can make high-frequency strategies economical even when each individual trade captures only a tiny pricing discrepancy.

Analysis: Volume and Liquidity Are Not the Same Thing

The most useful lesson from the Kalshi data is not that the volume is necessarily fake.

It is that volume can tell investors much less than they think.

A market can trade tens of millions of dollars while a surprisingly large share of those transactions comes from one liquidity provider repeatedly being hit by automated counterparties. Every trade can still be real. The counterparties can genuinely disagree over price. Money can genuinely change hands. And yet the headline volume can create an exaggerated impression of how broadly distributed participation actually is.

This is especially important for a relatively new perpetual-futures venue.

Kalshi only launched its first perpetuals in late May, expanding a business previously known primarily for event contracts. Its product expansion comes as crypto derivatives increasingly overlap with mainstream prediction-market products, regulated exchanges and conventional financial infrastructure.

Investors therefore need to separate at least three metrics: volume, liquidity and open interest.

Volume tells you how much traded. Liquidity tells you what size can actually be executed without materially moving the market. Open interest shows how many positions remain outstanding rather than simply being turned over repeatedly.

The gap between those metrics was unusually wide in Kalshi’s ether perpetual. CoinDesk reported a snapshot showing roughly 93 million contracts of 24-hour volume against approximately 1.5 million contracts of open interest, producing a volume-to-open-interest ratio near 61. The median across 20 Kalshi perpetual markets with open interest was about eight.

A high ratio does not prove manipulation. Market-making, arbitrage and high-frequency strategies can legitimately generate enormous turnover while holding relatively little directional exposure.

But it does mean headline volume deserves context.

The Market-Maker Explanation Is Plausible but Raises a Different Question

Kalshi’s response provides a credible mechanical explanation for why a fixed dollar amount would repeatedly appear.

If one market maker is contractually incentivized to leave roughly the same amount of liquidity resting in the book, and faster traders repeatedly consume that liquidity whenever its price becomes unattractive, recurring trade sizes are exactly what traders might expect to see.

The changing contract count strengthens that interpretation. The number of ether contracts moved as ETH’s price changed while the dollar target remained comparatively stable. Bitcoin’s two dominant sizes also remained close to a two-to-one relationship.

What investors should now ask is not simply whether those trades were legitimate.

The better question is how much of Kalshi’s apparent liquidity depends on subsidized professional quoting.

There is nothing inherently improper about that. New exchanges routinely use market-maker incentives to bootstrap order books. Liquid markets rarely emerge spontaneously, and professional firms are often paid or given fee advantages to quote continuously while organic participation develops.

Similar market-structure questions matter across crypto perpetuals, where enormous positions can coexist with highly concentrated professional activity. Recent Hyperliquid perpetual trading, for example, illustrates how large institutional-style strategies increasingly shape markets originally associated with retail crypto traders.

Kalshi Now Has to Show That Organic Participation Can Catch Up

Kalshi says more than 350,000 traders have used its perpetual markets and that open interest has doubled over the past 30 days. If that growth continues, dependence on one or a handful of subsidized liquidity providers should matter progressively less.

That is the metric worth watching.

A mature market should eventually develop enough independent market makers, arbitrageurs and discretionary traders that removing one participant does not materially change its depth or activity.

The same question already applies across the rapidly expanding prediction-market sector. Market infrastructure, participant concentration and order-book depth increasingly matter because pricing from these venues is being quoted as if it represents a broad collective view.

Kalshi’s repeated crypto trades do not, on the available evidence, establish wash trading. The exchange has offered a technically plausible alternative explanation and says its surveillance found no coordinated or self-matched activity.

But the episode exposes why investors should stop treating raw trading volume as synonymous with market depth or broad adoption.

For Kalshi, the more revealing numbers over the next several months will be growth in open interest, the number of active liquidity providers, spreads, executable depth and the share of trading that continues if incentives are reduced.

If those measures broaden while volume remains high, the current pattern will look like the normal bootstrapping phase of a new derivatives market.

If large headline volumes continue to depend heavily on the same fixed-size liquidity clips, the debate will shift away from whether the trades are legitimate and toward a more important question: how much independent market activity sits underneath the headline number?