Markets
Crypto Markets Have Donald Trump as 58% Favorite
The first presidential debate between Joe Biden and Donald Trump will take place in Atlanta this Thursday – a sign that the 2024 election is quickly approaching. To get a better idea of how the crypto crowd thinks this will play out, I paid a visit to Polymarket, where bettors can bet stablecoins on election results and just about anything else. What I discovered was a surprise.
O odds as of Monday night they give Trump a 59% chance of winning and Biden just 34%. In practice, this means that betting $100 on the former president would yield $169, while betting on the current president offers a payout of $294. Setting aside any partisan feelings, the odds seemed unusual to me, given that recent researches point to a small advantage for Trump, including in decisive states, but almost all are within the margin of error. So why do the betting odds reflect a landslide Trump victory?
I can think of two explanations. The first is that Polymarket detected a trend that researchers did not detect. This is entirely possible, given that polls have been notoriously wrong in recent elections, as it has become more difficult to contact voters in the post-landline era, and as respondents have become more inclined to lie or troll pollsters. However, prediction markets like Polymarket are considered high signal as people have an economic interest in the outcomes they express.
The other explanation is that Polymarket is wrong. This also seems possible given that the crypto sector as a whole appears to favor Trump, meaning the sample – as reflected by voting probabilities – is skewed and unrepresentative of the average voter. Put another way, many of the bettors on Polymarket may be demonstrating a cognitive bias that comes from living in an echo chamber. All of this could also be reinforced by the fact that crypto is emerging as the biggest “Trump Trade”—a term that describes investors looking to capitalize on asset sectors that are poised to benefit if the former president is reelected.
What do you think? I think any of the above explanations are plausible, and I’d also like to point out that it’s still only June and that many things could happen to shake up the race – including Thursday’s debate, which will, to the dismay of many Americans, put a debate of 78- an 81 year old person versus an 81 year old person. Lastly, if you’re curious about Polymarket, check out this intriguing DL News profile of one of the site’s most prolific bettors.
Jeff John Roberts
jeff.roberts@fortune.com
@jeffjohnroberts
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