Crypto markets give Trump a 59% chance of winning. Signal or noise?

The first presidential debate between Joe Biden and Donald Trump will take place this Thursday in Atlanta; This is a sign that the 2024 elections are fast approaching. To better understand how the crypto community would play out, I visited Polymarket, where bettors can bet on election results and just about anything else with stablecoins. What I found was a surprise.

As of Monday night, the odds give Trump a 59% chance of winning and Biden just a 34% chance of winning. 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. Putting any partisan sentiment aside, these odds strike me as unusual, given that recent polls indicate a small lead for Trump, including in battleground states, but nearly all are within the margin of error. So why do the odds reflect Trump’s landslide?

Two explanations come to my mind. The first is that Polymarket detected a trend that pollsters could not detect. This is entirely possible, given that polls have failed badly in recent elections as voters have become harder to reach in the post-landline era and respondents have an increased tendency to lie or troll pollsters. Meanwhile, prediction markets like Polymarket are considered high signal because people have an economic stake in the outcomes they state.

The other explanation is that Polymarket is at fault. This seems possible given that the crypto industry as a whole supports Trump; This means that the sample is skewed and not representative of the average voter, as reflected by the voting rates. In other words, many of Polymarket’s punters may be displaying a cognitive bias that comes from living in an echo chamber. All of this could also be supported by the emergence of cryptocurrency as the biggest “Trump Trade” of this cycle; The term describes investors looking to capitalize on asset sectors that stand to benefit if the former president is re-elected.

What are you thinking? I think both of the above explanations are plausible, and I would also like to point out that we are only in June and many things can happen that will shake up the race; will hole out with a score of 78, to the dismay of many Americans, including Thursday’s debate. Comparison between year old and 81 year old. Finally, if you’re curious about Polymarket, check out the intriguing DL News profile of one of the site’s most prolific punters.

Jeff John Roberts
[email protected]
@jeffjohnroberts

This story first appeared on Fortune.com