Gen Z ‘nihilism’ is fueling a $100 trillion crypto derivatives boom, in response to a broken system

The surge in speculation driving prediction markets and leveraged bets on various sectors isn’t reckless, it’s rational, according to CoinFund managing partner David Pakman.

In a presentation during Consensus Hong Kong, Pakman reframed the behavior as “economic nihilism,” a calculated response by Gen Z to structural barriers in wealth building.

His case started with housing. For Gen X and Boomers, he said, the average home cost about 4.5 times their annual salary. For Gen Z, it’s closer to 7.5 times.

That shift, Pakman argued, effectively shuts younger people out of the housing market, long considered the cornerstone of middle-class wealth. Only 13% of 25-year-olds own their homes, over half of Gen Z investors now own crypto, he said.

With few traditional options, Pakman said younger generations are turning to high-risk bets, including memecoins, perpetual futures, zero-days-to-expiration options and prediction markets, not out of ignorance but as a strategy.

“It’s becoming actually rational to think that if the typical ways that long-term wealth creation is closed off to you, a small chance at a large return beats near certainty of slow decline,” he said.

He pointed to crypto perpetual contracts. These products, futures contracts that don’t expire, saw $100 trillion in notional volume last year, according to data he shared.

Prediction markets also exploded, from $100 million to $44 billion in just three years. While some pundits use them for political forecasting, Pakman said 80% of the activity is sports betting. Dune data paints a similar picture, with $1.8 billion out of $2 billion in daily prediction-market volumes centered on sports at the beginning of the month.

Pakman urged builders to meet it with better tools.

“It’s up to us in crypto to build products that allow the expression of risk in more transparent ways, that are more fair, have lower fees, and can be more transparent to both disclose risk and payout abilities,” he said.