The attempted assassination attempt on Donald Trump at a Pennsylvania rally on Saturday appears to have boosted his chances of becoming president. According to Polymarket, the world’s largest prediction market, the chances of his winning the election have risen from 60% to 72% with the near-miss appearing to boost public support for Trump.
According to that same market, Biden’s chances have risen slightly, to 18%, while the odds of Vice President Kamala Harris replacing Biden and emerging victorious have declined sharply, from 13% to 5%. Meanwhile, on prediction market PredictIt, Trump’s odds have increased to 67%, and Biden’s has fallen to 26%.
Trump's election odds just hit 70%.
— Polymarket (@Polymarket) July 14, 2024
Yet another all-time high. pic.twitter.com/S2GdqIdetL
What are prediction markets?
Prediction markets, also known as betting markets, are markets where traders exchange contracts that pay based on the outcomes of unknown future events. The prices generated from these contracts are like a collective prediction among market participants. So, the price equates to the odds. For example, Trump shares are trading at 72 cents, denoting a 72% chance he will win.
If the better-trader believes that the true odds of Trump winning the election are greater than 72%, they would buy “Yes” shares for 72 cents each. If Trump wins, each “Yes” share would be worth $1, creating a profit of 28 cents per share. In that outcome, anyone who bought “No” shares, their investment would become worthless. Traders can buy and sell their shares at any point before the outcome, shifting the price of share, and thus, the odds.
Of all prediction markets, Polymarket wants to be the transparent and trustless one. The platform is decentralized and built on top of the Ethereum blockchain, and users make bets with stablecoins. In May, the company announced it had raised over $70 million across its Series A and B funding rounds, with Ethereum's founder Vitalik Buterin among the investors.
Polls paint a different picture of the election outcome, with FiveThirtyEight predicting Trump has only a two point lead over Biden. But research suggests that prediction markets may be a “better forecaster” of political outcomes, on average. That's because traders combine all available information—news, polls, and expert opinions—and make trades based on that combined knowledge. The economic incentive should mean that "as more savvy traders participate, the market’s price (probability) will change to more accurately reflect the true current odds,” according to Polymarket's site.
In light of this, Polymarket is creating markets for users to make a bet on quite literally anything: "Your job is to find markets where you disagree with the current odds, and profit by betting on your beliefs.
This includes a market for “Who will call for Biden to drop out?” with Joe Manchin trading at 62 cents. There are markets for the number of times Elon Musk will tweet in a week. Will Taylor Swift get engaged in 2024? The market says there’s a 38% chance. Will Satoshi, the author of the Bitcoin whitepaper, have his identity proven? Perhaps unsurprisingly, the traders have predicted the odds of this happening at less than 1%.
Trump stocks and crypto are up
Further indicator that the shooting could, in the long run, play to Trump's favor, is the market reaction. For instance, the crypto market has rallied, as Trump has doubled down on his promise to be the “crypto president" if re-elected. Following the shooting at 6:15pm EST, Bitcoin has risen 6%, breaking $63,000 on Monday morning, for the first time in three weeks, according to CoinGecko data. Likewise, crypto-linked stocks have also been climbing. Shares in Coinbase Global, Marathon Digital Holdings and Riot Platforms have risen by 10%, 7% and 6%, respectively.
Likewise, the share price of a Trump-owned company is up. Shares in Trump Media and Technology, the parent company of Truth Social, were up 47% between Friday’s closing price and Monday morning, but have since retreated, now trading at $41.35. Nonetheless, it represents a 32% increase from last week. This has hypothetically added $1.8 billion to his total wealth, according to The Telegraph.
