- Polymarket traders predicted Bidenโs resignation.
- Prediction markets are among the most accurate forecasters.
- Traders have bet $300 million on the election outcome.
Prediction markets have become influential tools in forecasting. One of them is Polymarket, a decentralized and blockchain-based prediction platform that allows traders to bet on all sorts of outcomes, including politics.
Sponsored
Recently, Polymarket experienced a surge in activity as traders speculated on President Joe Bidenโs political future. Treaders bet nearly $80 million was wagered on Bidenโs potential resignation, showing how effective predictive markets can be.ย
Biden Decision Shows Polymarketโs Predictive Power
Prediction markets have once again shown their utility in forecasting. On Sunday, July 21, President Joe Biden announced his resignation from the presidential race, an event predicted by Polymarket traders. Collectively, traders have bet $21 million on whether or not Biden would drop out, with most betting yes.
On the day Biden dropped out, markets placed a 74% chance of Biden dropping out of the race. However, not all traders had similar results. One of them, AnonBidenBull, lost nearly $1.8 million, predicting Biden would stay in the race.
The successful prediction boosted Polymarket. Following the resignation, Polymarketโs daily trading volume soared to a record $28 million, reflecting increased interest in the platform. Many new traders bet on the election outcome, betting a total of $325 million, with Trump leading in odds at 64%.ย
Why Predictive Markets Work Well
The odds on predictive markets like Polymarket work by traders influencing the prices based on their expectations of the outcome. If traders believe that some event is more likely than the prediction market shows, they buy the contract, bidding the price up.ย
What is more, the financial incentives motivate participants to research thoroughly. Moreover, the more a trader is convinced in their case, the more willing they will be to bet. This way, traders with more conviction have a higher influence on the odds in a betting market.ย
Still, as seen in the bet on Bidenโs dropping out, odds can significantly change over time. The odds in the bet went from around 25% before July to 75% ahead of the resignation. This reflects how changing conditions influence the likelihood of an outcome and the perception traders have.ย ย ย
On the Flipside
- Critics of prediction markets cite ethical concerns with some bets, especially those about sensitive subjects such as politics. Betting on outcomes in these areas can influence outcomes, sometimes in a less desirable direction.
- Polymarket was criticized over some of its approved bets, including the one on Ethereum ETFs. One critic stated that the platform approved the bets before the outcome was certain.ย
Why This Matters
The success of Polymarket in predicting Bidenโs resignation shows the growing influence of prediction markets in political forecasting. As prediction markets gain traction, their influence on political discourse and decision-making will likely increase.ย
Read more about Polymarket and its significance:
DeFi Prediction Market: What Are Its Odds to Boom?
Read more about other effects of Biden dropping out:
Kamala Coin Surges 80% After Biden Drops Out, Backs Vice President for Election