Nithin Kamath says speculative craziness brought more people into US markets: ‘Nothing expands markets like greed, FOMO

Kamath highlighted that before the COVID-19 pandemic in 2020, the last major so-called innovation in the US markets was 0-day options. But since then, crypto trading intensified, and with that, stablecoins, derivatives, NFTs, and DeFi. “The rate at which the US markets have changed (mutated) since COVID is nuts,” he wrote.

For all the jokes and memes, crypto is fully mainstream now, with almost full regulatory blessing, with futures, ETFs, the Zerodha CEO pointed out. He added that while one can call the prediction markets betting or gambling, they too have become mainstream, so much so that stockbrokers like Robinhood now get a big chunk of their revenue from them.

However, Kamath sees a silver lining to this “speculative craziness”. He feels that this gets people into the market. “Nothing expands the markets like greed, FOMO, and craziness. Nobody ever read Morgan Housel and started investing. Dogecoin, on the other hand, has done more for financial literacy than anything else,” he wrote.

However, the Zerodha CEO warned that on the flip side, such easy access to speculation is bad for people and society.

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An analysis by Bloomberg found that prediction market trading volume has grown more than 20-fold since October 2024. Sports has become a major draw for prediction-market users, with cryptocurrency also contributing to activity. On Kalshi, around 99% of trading volume in combination bets, or parlays, comes from sports, according to the Bloomberg analysis.

Also read | Why Nithin Kamath believes NRI investing in India has become easier than ever

Cryptocurrencies meanwhile fell sharply, with bitcoin and ether touching their lowest levels for more than two months. This came as investors worried that a Democratic Party-controlled US Congress will toughen regulation on the digital asset. Bitcoin, the oldest and largest cryptocurrency by market capitalisation, fell by more than 2% to $73,708, the lowest price since August. Ether fell about 5% to $2,223, also the lowest since August.

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