Crypto Prediction Markets Were The Election's Biggest Winner
Online prediction market PredictIt shared their insights on how futures traders are speculating on every aspect of the election -- and paying in crypto.
- PredictIt shows Biden as the clear favorite, but traders can bet on many subcategories.
- Civil unrest, economic uncertainty, and the election have all driven demand for prediction markets.
- The U.S. election could prove a watershed moment for crypto prediction markets everywhere.
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The winner of the U.S. presidential election will dictate the direction of the world’s largest economy. And though Biden and Trump stand opposed, the markets only fear one thing: a deadlock.
For those in the crypto space, the tension is just as high.
The Rise of Crypto Prediction Markets
The election has generated massive interest in crypto prediction markets such as Polymarket, Augur, and PredictIt. PredictIt is a platform that allows users to bet on the outcome of political events by trading political events futures.
Users can buy futures for the price shown, trade them as price changes, and earn a dollar per future if their outcome is fulfilled. Like all prediction markets, traditional or otherwise, the PredictIt shows Biden as the favorite to win.
Crypto Briefing spoke with Will Jennings, head of public engagement for PredictIt, to learn more. Jennings revealed that the election event has seen the highest volume in the exchange’s history, which has processed 1.5 billion events futures for over 250,000 registered accounts.
“The 2020 presidential winner market is by far the largest single market we’ve ever had,” said Jennings, “with nearly 117 million shares traded in its lifetime and over 31 million in outstanding shares, not to mention the 1.5 million comments on its discussion board.”
Prediction market participants aren’t just betting on the outcome of the presidential election. Traders can also buy and sell futures based on the electoral college margin of victory, the net change in senate seats, and any number of other niche markets.
Some users even traded thousands of dollars in futures speculating on how many tweets Donald Trump would post before noon on a given day.
Political Futures Data as a Research Tool
Discussing the election, Jennings stated that “this one event futures market will be a case study in political psychology and behavioral finance for years to come,” explaining that dozens of academic partners from universities are eager to study the data.
Interestingly, many visitors to the site are mere spectators, coming to monitor sentiment and forecasts rather than to bet on events’ outcomes.
“One of the most significant changes we’ve seen over the years is a growing user culture and media ecosystem that regularly analyzes and publishes market-related commentary,” said Jennings.
The data can be used, for instance, to examine the true value of “the wisdom of the crowd,” identifying whether groups can accurately predict the outcome of major events.
As crypto prediction markets like PredictIt soar in popularity, the market for crypto predictions market data will likely grow as well.