Markets
Crypto Markets Have Donald Trump as 58% Favorite
The first presidential debate between Joe Biden and Donald Trump will take place this Thursday in Atlanta, a sign that the 2024 elections are fast approaching. To get a better idea of what cryptocurrencies are thinking, I visited Polymarket, where punters can bet stablecoins on election results and just about everything else. What I discovered was a surprise.
THE Monday night odds give Trump a 59% chance of winning, and Biden only 34%. In practice, this means that betting $100 on the former president will net you $169, while betting on the current president will net you $294. Beyond any partisan feeling, the probabilities seemed unusual to me given that recent polls indicate a small Trump lead, including in battleground 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 did not detect. This is entirely possible given that polls have been notoriously wrong in recent elections as voters have become harder to reach in the post-fix era and respondents are more likely to lie or troll pollsters . Meanwhile, prediction markets like Polymarket are considered high-signal since people have an economic stake in the outcomes they express.
The other explanation is that Polymarket is wrong. This also seems possible given that the crypto industry as a whole appears to favor Trump, meaning the sample, as reflected by voting odds, is skewed and not representative of the average voter. In other words, many punters on Polymarket may display a cognitive bias related to living in an echo chamber. All of this could also be reinforced by the fact that crypto is emerging as the biggest of this cycle.Trump trade» – a term that describes investors seeking to capitalize on asset sectors that stand to benefit from the former president’s re-election.
What do you think? I find either of the above explanations plausible, and I’d also like to point out that it’s still only June and a lot could happen to shake up the race, including Thursday’s debate which, to the dismay of many Americans, will pit a 78-year-old against an 81-year-old man. Finally, if you are curious about Polymarket, take a look at this intriguing DL News profile of one of the most prolific punters on the site.
Jeff John Roberts
jeff.roberts@fortune.com
@jeffjohnroberts
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