The crypto markets have been awash with bets of high stakes on the US Presidential election of 2024. Donald Trump is just ahead of Kamala.
Reuters reported that platforms like Polymarket, and Kalshi where betting on elections has exploded in popularity, show a slight advantage for Trump – 57% to 43% at Polymarket, and a slightly closer 51% to 49 % on Kalshi.
The trend of crypto markets is in stark contrast with traditional polling which shows that the race remains close, without any clear winner.
While crypto-dollars chase the election results, millions of dollars are poured into bets driven by both speculations and political conviction.
These prediction markets are argued to be a valuable barometer for sentiment. They also add credibility, which opinion polls might not have.
Elon Musk is a vocal supporter of the betting markets. He said that they are “more accurate than polls because actual money on the line.”
Critics argue that these markets are biased and cater to an audience of crypto-savvy niches rather than reflect the wider voter base.
Crypto platforms see massive election bet volumes
Prediction markets such as Polymarket and Kalshi, which were first introduced five years ago, have grown rapidly in popularity over the past few years, especially around political events.
Polymarket is currently the leader in volume of election related wagers with an astounding $3.1 billion, making it among the most active platforms.
Kalshi is a US-regulated trading platform supervised by the Commodity Futures Trading Commission. It has witnessed $197 millions in trades for its Presidential Outcome contract. An additional $33.8million was traded on its Electoral College Margin contract.
The prices are based on the perceived probability.
On Polymarket, for example, a Trump Contract costs $0.58 while a Harris Contract is $0.42. A winning contract will yield $1.
Kalshi’s spokesperson stated that it has implemented trade limits of $7 million per individual and $100 millions for institutions to prevent traders from having an excessive impact on the market.
Some analysts doubt that these platforms accurately reflect the voter’s sentiment despite their high volume. Michael Cahill stated that Douro Labs CEO,
The average voter doesn’t spend time or money in prediction markets, he said. He added that these platforms are dominated primarily by users who have a crypto-native background and many of them support Trump.
Prediction markets: uncertain future after the election
Although some analysts believe that the trading volume may be overstated, the surge in betting on politics has proven the strength and popularity of prediction markets.
Adam McCarthy, research analyst with digital market data provider Kaiko pointed out that Polymarket’s $3.1 billion of trades include inactive bets by former candidates such as Nikki Haley or Robert F. Kennedy Jr.
McCarthy explained that although the $2 billion figure is impressive, it does not reflect all active markets.
Polymarket, however, has set a new record for October’s trading volume, which reached 1.1 billion dollars.
These platforms’ relevance will be challenged after the elections.
McCarthy said that the success of their products will be determined by how they can adapt to non-political market and maintain user engagement.
Regulation challenges are also on the horizon. Polymarket for example, does not allow US citizens to participate due to regulations. However, a French citizen reportedly bet a large amount on Trump adding extra intrigue.
Polymarket, as well as Kalshi, offer a variety of contracts, ranging from Federal Reserve decision to popular culture. They are diversifying in order to maintain activity even after the elections.
Crypto prediction markets will provide valuable insights on real-time public sentiment as the U.S. elections unfold. However, whether or not they are able to maintain their momentum after an election is still to be determined.
The ICD published the following article: Cryptoprediction markets show Trump ahead of Harris in election-eve race.
