Traders on Polymarket, a cryptocurrency-based prediction platform, are betting heavily on a decisive win for former president Donald Trump in the 2024 U.S. presidential election.
What Happened: With $166.1 million staked, Trump holds a 56% chance of victory, giving him a 21-percentage-point lead over current president Joe Biden, according to Polymarket’s non-American participants.
Nate Silver‘s FiveThirtyEight aggregate of polls show Trump leading by just one point, although that does not directly translate into winning chances.
Some analysts suggest that Polymarket users, who are inherently crypto enthusiasts, might be biased towards Trump.
On PredictIt, a traditional prediction market settled in U.S. dollars, Trump leads Biden by a narrower margin of 50-45, still wider than most polls but not as dramatic as on Polymarket.
Trump’s pro-crypto stance might be a factor in his favor on these platforms.
Additionally, the crypto community’s fondness for memes and trolling is reflected in the higher market cap of Trump-themed “PoliFi” tokens compared to those themed after Biden.
Nonetheless, traders on Polymarket are betting on outcomes rather than personal preferences, which should ideally make these markets a reliable sentiment gauge.
Ryan Selkis, founder of crypto research firm Messari, tweeted that the Trump campaign uses Polymarket data alongside traditional polls due to skepticism about the latter’s accuracy, Coindesk reported.
Also Read: Why Are Dogecoin, Shiba Inu And Other Meme Coins Struggling?
Why It Matters: In prediction markets, those betting on the correct outcome receive $1 per share, while incorrect bets yield nothing.
Share prices reflect the perceived probability of an event’s outcome.
A simpler explanation for Trump’s high odds on Polymarket is that traders there place a high premium on leading candidates.
Historical data shows similar discrepancies: ahead of Taiwan’s January 2023 election, Polymarket gave Lai Ching-te a 60-70% chance of winning despite lower polling numbers.
Lai won with 40% of the vote.
Similarly, for Indonesia’s February election, Polymarket had Prabowo Subianto‘s chances in the high 70s, though his polls were in the high 50s; he won with 55%.
Trump’s odds are also influenced by the heavy discounting of independent candidate Robert F. Kennedy Jr., whom Polymarket gives a 2% chance, compared to FiveThirtyEight’s 9%.
This pattern mirrors Taiwan’s election, where a third-party candidate also received lower odds on Polymarket than in polls.
Trump’s excitement about the upcoming debates contrasts with speculations that he might skip them if not favorable to his interests.
Democratic strategist James Carville suggested Trump might avoid the debates if he perceives a potential loss. However, prediction markets still favor the debates occurring as planned, giving a 77% chance they will proceed.
Additionally, the market currently sees only a 14% chance that Trump will face another conviction before the November election, given the bureaucratic delays in his felony trials.
In other news, Coinbase’s upcoming quarterly earnings report on June 14 will be closely watched, especially its trading volume—a key indicator of retail investor participation.
Kalshi, a U.S.-regulated prediction market, forecasts Coinbase’s trading volume at $174 billion, up from $154 billion last quarter.
This rise aligns with the broader trend of institutional adoption of crypto, evidenced by endorsements from major fund managers like BlackRock and Fidelity through ETF products.
However, this institutionalization contrasts with Bitcoin‘s BTC/USD original vision as a decentralized asset.
What’s Next: As the crypto market anticipates these developments, Benzinga’s Future of Digital Assets event on Nov. 19 will be a pivotal gathering for industry leaders to discuss these trends and their implications for the digital asset landscape.
Read Next: Democrat Senators Urge Federal Reserve To Cut Interest Rates As Bitcoin Rally Stalls
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© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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