Crypto exchange Gemini reported its lowest quarterly retail trading volume in three years, even as overall trading activity on the platform expanded.

Total spot trading volume rose 18% from the second quarter to $4.5 billion, according to Gemini's Q3 earnings report. Institutional volume climbed 26% to $3.9 billion, while retail volume fell 14% to $600 million — its weakest level since the third quarter of 2023.

Gemini said the quarterly increase in spot trading volume was "supported by increased institutional Zcash activity and expanded affiliated market-making," but did not give a specific reason for the decline in retail trading.

Despite the retail slump, Gemini's exchange revenue increased 7% from the previous quarter to $13.4 million, as institutional revenue more than doubled. Retail traders nonetheless remained the company's largest source of exchange revenue, contributing nearly three-quarters of the total. That dependence is why the retail pullback carries weight beyond the headline number: the customers generating the smallest share of trading volume still supply most of the exchange business.

Crypto exchanges turn to prediction markets for growth

Gemini was not alone in reporting softer crypto trading activity during the most recent quarter.

Coinbase also flagged weaker retail and institutional activity, with consumer spot trading volume falling 9% from the previous quarter to $23.4 billion. Coinbase Chief Financial Officer Alesia Haas said "continued growth in prediction markets helped offset softer crypto trading activity."

At Robinhood, crypto revenue fell 55% year-on-year to $120 million, though the drop was offset by a sixfold increase in event-contract revenue to $173 million.

Gemini drew some support from its own prediction exchange, Gemini Predictions, where revenue rose 52% quarter-on-quarter to $796,000 — growth that was not yet significant enough to offset declines elsewhere in the business.

Taken together, the three companies' results point to a converging pattern across the sector: as spot crypto activity cooled, prediction markets and event contracts did much of the work of cushioning trading revenue.

Gemini looks to expand prediction markets

The company reported stronger prediction-market activity heading into the fourth quarter, with average daily traders in October running about 50% above the third-quarter average. Nearly a third of new prediction traders were new to Gemini, more than double the proportion recorded in Q3.

Gemini is also seeking to distribute its event contracts through other platforms. Under an August nonbinding agreement with Apex Fintech Solutions, Gemini Titan would become the exclusive venue for crypto event contracts distributed through Apex's futures brokerage to its brokerage customers, subject to definitive agreements.

Gemini is set to host a Q3 earnings call on Friday. The call is the next scheduled opportunity for management to address the retail decline, which the company has so far left unexplained, and to clarify whether the Apex arrangement advances from a nonbinding framework to definitive agreements.