What Happened: Prediction market traders on Polymarket think Trump’s win in the Republican Iowa Caucus is a shoo-in. Shares on this outcome pay a mere 2.14% return at the time of writing – implying a 98% chance for Trump to win. No surprise, considering Trump’s near 30-point lead, according to CNBC.
Over $1 million in turnover suggests there is no shortage of traders wanting to pick up “easy money” — or those betting on a major upset.
Why It Matters: Prediction markets have been picking up steam in recent months — a recent market on the approval of a Spot Bitcoin ETF attracted more than $10 million in volume.
With several major elections around the world in 2024, election betting season bodes well for prediction markets. Traders on social media appreciate information being quantified.
Goltra, “Speculator” on X, tweeted: “News headline -> observe reaction in prediction markets That’s the future of information consumption”
Nate Silver, former Editor-in-Chief of Fivethirtyeight, an opinion poll analysis site, backed the usefulness of prediction markets:
What’s Next: While Trump’s win may be all but assured, traders are much more interested in who will be the runner-up in the Iowa Caucus.
Polymarket gives Nikky Haley a 64% chance; Ron DeSantis still has a solid 32% chance, while Vivek Ramaswamy is a long shot at 6%. Interestingly, the trading volume of more than $2.1 million is double that of the main market, suggesting traders see no credible opposition to Trump in Iowa.
Particularly risk-affine traders are speculating on the margin of victory. At the time of writing, traders give Trump a 56% chance to trounce his opposition with a margin of 30 to 40 percentage points. The market has racked up over $250,000 in trading volume.
At least at this early stage of the race, Trump’s move to swerve the debates seems to be paying off.