Markets
Cryptocurrency markets have Donald Trump as a 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 fast approaching. To get a better sense of how the cryptocurrency public 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.
THE odds starting Monday evening giving Trump a 59% chance of victory and Biden only 34%. In practice, this means that betting $100 on the former president would net you $169, while betting on the current one offers a payout of $294. Leaving aside any partisan feelings, the odds seemed unusual to me recent polls they indicate a small advantage for Trump, even in the conflict states, but almost all are within the margin of error. So why do the betting odds reflect a Trump landslide?
I can think of two explanations. The first is that Polymarket detected a trend that pollsters didn’t. This is entirely possible given that polls have been notoriously inactive in recent elections as voters have become harder to reach in the post-tax era and as respondents are increasingly likely to lie to or troll pollsters. Meanwhile, prediction markets like Polymarket are considered high-signal since 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 cryptocurrency industry as a whole appears to favor Trump, meaning that the sample, as reflected in voting probabilities, is skewed and not representative of the average voter. In other words, many of the bettors on Polymarket may be exhibiting a cognitive bias that comes from living in an echo chamber. This could also be strengthened by the fact that cryptocurrencies are emerging as the largest cycle of this cycle”Trump’s trade”—a term that describes investors looking to capitalize on asset sectors that are poised to benefit if the former president is re-elected.
What do you think? I find both of the above explanations plausible and would also like to point out that we are still only in June and many things could happen that could shake up the race, including Thursday’s debate which, to the dismay of many Americans, will put a 78-year against an 81 year old. Finally, if you’re curious about Polymarket, check out this intriguing one DL News profile of one of the most prolific bettors on the site.
Jeff John Roberts
jeff.roberts@fortune.com
@jeffjohnroberts
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