Prediction markets: 72% chance of Trump winning after shooting

The attempted assassination of Donald Trump at a rally in Pennsylvania on Saturday appears to have boosted his chances of becoming president. According to Polymarketthe world’s largest prediction market, the odds of him winning the election have risen from 60% to 72%, with the near miss appearing to boost public support for Trump.

According to the same market, Biden’s chances have increased slightly, to 18%, while Vice President Kamala Harris’ chances of replacing Biden and emerging victorious have decreased dramatically, from 13% to 5%. Meanwhile, in the prediction market PredictTrump’s chances rose to 67%, and Biden’s dropped to 26%.

What are prediction markets?

Prediction markets, also known as betting markets, are markets where traders exchange contracts that pay out based on the outcomes of unknown future events. The prices generated by these contracts are like a collective prediction among market participants. So, the price equates to probabilities. For example, Trump’s stock is trading at 72 cents, denoting a 72% chance that he will win.

If the best trader believes that the true odds of Trump winning the election are greater than 72%, he would buy “Yes” shares for 72 cents each. If Trump wins, each “Yes” share would be worth $1, creating a profit of 28 cents per share. In this outcome, anyone who bought “No” shares would have their investment worthless. Traders can buy and sell their shares at any time before the outcome, changing the share price and therefore the odds.

Of all the prediction markets, Polymarket aims to be the most transparent and trustworthy. The platform is decentralized and built on the Ethereum blockchain, and users place bets using stablecoins. In May, the company announced that it had raised more than $70 million in its Series A and B funding rounds, with Ethereum founder Vitalik Buterin among its investors.

Polls paint a different picture of the election outcome, with Five Thirty Eight predicting that Trump has only a two-point lead over Biden. But studies suggest that prediction markets can be a “better predictor” of political outcomes, on average. That’s because traders combine all available information — news, polls, and expert opinions — and make trades based on that combined knowledge. The economic incentive should mean that “as more experienced traders participate, the market price (probability) will change to more accurately reflect the true current probabilities,” according to Polymarket’s website.

In light of this, Polymarket is creating markets for users to place bets on literally anything: “Your job is to find markets where you disagree with the current odds and profit by betting on your beliefs.

This includes a market for “Who will ask for Biden’s resignation??” with Joe Manchin trading at 62 cents. There are markets for the number of times Elon Musk will tweet in a week. Will Taylor Swift get engaged in 2024? The market says there is a 38% chance. Will Satoshi, the author of the Bitcoin whitepaper, ever be proven to be true? Perhaps unsurprisingly, traders have predicted the chances of this happening in Less than 1%.

Trump’s stocks and cryptocurrencies are on the rise

Another indicator that the shooting could play in Trump’s favor in the long run is the market reaction. For example, the cryptocurrency market rallied as Trump doubled down on his promise to be the “crypto president” if reelected. After the shooting at 6:15 p.m. EST, Bitcoin surged 6%, breaking $63,000 on Monday morningfor the first time in three weeks, according to data from CoinGecko. Likewise, cryptocurrency-linked stocks have also been rising. Stocks in Coinbase Global, Marathon Digital Holdings and Riot Platforms rose 10%, 7% and 6%, respectively.

Similarly, the stock price of a company owned by Trump is on the rise. Shares of Trump Media and Technology, the parent company of Truth Social, rose 47% between Friday’s closing price and Monday morning, but have since retreated, now trading at $41.35. That’s still a 32% increase from last week, though. That would add an estimated $1.8 billion to his total wealth, according to The telegraph.

Recommended newsletter:

CEO Daily provides essential context for the news leaders need to know from around the business world. Every weekday morning, more than 125,000 readers rely on CEO Daily for insights into—and from inside—the C-suite. subscribe now.

Source