Crypto investors bet on a Trump victory...signal or noise?
Polymarket, a cryptocurrency betting marketplace, is giving Trump a 59% chance of winning the election. This is notable because it's a departure from recent polls, Fortune reported today.
With the first debate between the presidential candidates taking place this Thursday (local time) in Atlanta, the US presidential election is fast approaching. To find out how the crypto market is predicting the election, I turned to Polymarket. Here, users can bet on a variety of topics, including the outcome of the election, using stablecoins. As of the 24th, Trump had a 59% chance of winning and Biden had a 34% chance. This was a significant difference from the polls. This was a significant difference from the polls, as while Trump had a slight lead in the polls, most of the results were within the margin of error.
So why do the betting odds at Polymarket predict a Trump victory?
The first possibility is that the polymarkets may have detected a trend that the polls did not. Polls have been inaccurate in the last few elections, largely due to the decline in landline phone usage and the increased likelihood of respondents lying or giving misleading answers. Prediction markets like Polymarket, on the other hand, are considered more reliable because of the financial stakes involved.
The second possibility is that Polymarket got it wrong. Cryptocurrencies tend to support Trump across the board. Therefore, the betting results may not reflect the opinion of the general electorate. As a result, Polymarket users may be exhibiting an "echo chamber" phenomenon, where people with the same views cluster together. It is also possible that investors are betting on assets that will benefit from a re-election, especially as cryptocurrencies have been highlighted as a "Trump trade" in this election.
Both explanations seem plausible. It's still June, and there are many variables that could affect the election, not the least of which is the fact that the debates will pit 78 and 81-year-old candidates against each other.
