TLDR
- Kraken’s acquisition of Breakout marks its entry into the growing crypto prop trading sector.
- The prop trading market is projected to hit $14.5B by 2033, with Kraken leading the shift.
- Prop trading search volume surged 5,000% from 2020-2025, reflecting growing interest.
- Platforms like Fondeo.xyz use AI to improve trader development and reduce failure rates.
In September 2025, Kraken made a significant move by acquiring Breakout, a proprietary trading firm, signaling its entry into the rapidly growing crypto prop trading sector. This acquisition is notable because it marks the first time a major cryptocurrency exchange has directly entered the proprietary trading space, combining Kraken’s institutional-grade infrastructure with Breakout’s evaluation-based funding model. The deal comes at a time when the prop trading market has seen explosive growth.
Prop Trading Surge and Institutional Interest
According to Google Trends data, the global search volume for “prop trading” skyrocketed by over 5,000% between 2020 and 2025, highlighting the growing interest in this trading model. The prop trading market is now valued at $5.8 billion in 2024 and is projected to reach $14.5 billion by 2033. This surge in interest is not limited to traditional markets but is especially prominent in the cryptocurrency sector.
Kraken’s acquisition of Breakout comes amid this massive growth. As Arjun Sethi, Kraken’s co-CEO, noted, “Breakout gives us a way to allocate capital based on proof of skill rather than access to capital itself.” This approach reflects the shift in the industry, moving from traditional finance models where access to capital was a key factor to one where traders are judged based on performance.
Strategic Expansion into Prop Trading
Kraken’s acquisition of Breakout is part of a broader strategy that includes previous acquisitions of NinjaTrader and Capitalise.ai. These moves suggest that Kraken is positioning itself to become a major player in the professional trading infrastructure space. Kraken’s involvement in prop trading allows the company to integrate Breakout’s funding model into Kraken Pro, offering both evaluation and profit-sharing opportunities to traders.
Breakout had already issued over 20,000 funded accounts since its launch in 2023, providing Kraken with access to a ready customer base. By integrating Breakout’s model with its own resources, Kraken aims to not only provide funding but also to cultivate skilled traders who can contribute to the firm’s growth and profitability.
The Competitive Landscape and Industry Response
The entry of Kraken into the prop trading space has disrupted the competitive landscape. Established firms like FTMO, which has been a leader in the sector since 2015, now face competition from exchanges with significant capital and infrastructure, like Kraken. FTMO has responded by expanding its crypto offerings and improving spreads, adding over 30 crypto CFD instruments by mid-2025.
However, the emergence of platforms like Fondeo.xyz is also noteworthy. These crypto-native firms are focusing on trader development alongside funding. Fondeo.xyz, for example, is integrating AI coaching into its platform to address the psychological and technical gaps that often cause traders to fail their evaluations. This approach aims to reduce the high failure rates seen in traditional prop trading models, where over 90% of traders fail their first evaluations.
The Role of AI in Trader Development
One of the key challenges in prop trading is the psychological and technical barriers that traders face. Most traders fail their first evaluation not due to a lack of capital but because they struggle with risk management, discipline, and strategy. As a result, the next frontier in prop trading involves the integration of AI to address these issues.
Platforms like Fondeo.xyz are already leveraging AI to offer personalized coaching, helping traders improve their decision-making and mental resilience. This represents a shift towards a more holistic approach to trader development, combining capital with tools that improve the trader’s overall skill set.
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