The assassination attempt on Donald Trump at a rally in Pennsylvania on Saturday appears to have increased his chances of becoming president. According to Polymarket, the world's largest forecasting market, his chances of winning the election have risen from 60% to 72%, and this narrow victory is likely to boost public support for Trump.
The market saw Biden's chances of winning rise slightly to 18%, but the chances of Vice President Kamala Harris winning on Biden's behalf plummeted from 13% to 5%. Meanwhile, prediction market PredictIt saw Trump's chances of winning rise to 67%, while Biden's chances of winning fall to 26%.
What is a prediction market?
Prediction markets, also known as betting markets, are markets where traders enter into contracts to be paid based on the outcome of unknown future events. The prices resulting from these contracts are like the collective predictions of market participants. Thus, the prices represent odds. For example, Trump shares are trading at 72 cents, which indicates that there is a 72% chance that he will win.
If better traders believe the true probability of Trump winning the election is greater than 72%, they will buy “Yes” shares at 72 cents each. If Trump wins, each “Yes” share will be worth $1, generating a profit of 28 cents per share. As a result, those who bought “No” shares will have a worthless investment. Traders can buy and sell shares at any point before the outcome, causing the price to fluctuate and the probability to change.
Polymarket aims to be the most transparent and trustworthy of all prediction markets. The platform is decentralized and built on the Ethereum blockchain, with users placing bets with stablecoins. The company announced in May that it had raised more than $70 million in Series A and B funding rounds, with investors including Ethereum founder Vitalik Buterin.
Polls offer differing perspectives on the election's outcome, with FiveThirtyEight projecting Trump to lead Biden by just two points. But research suggests that prediction markets may, on average, “predict political outcomes more accurately.” This is because traders combine all available information — news, polls, expert opinions — and trade based on that knowledge. According to PolyMarket's site, economic incentives should mean that “as smarter traders join, market prices (probabilities) will change to more accurately reflect the current true odds.”
With this in mind, Polymarket has created markets where users can bet on literally anything: “Your job is to find a market where you disagree with the current odds, bet on your beliefs and make a profit.”
This includes the “Who will call for Biden's withdrawal?” market, with Joe Manchin trading at 62 cents. There are also markets predicting how many times Elon Musk will tweet in a week. Will Taylor Swift get engaged in 2024? The market puts it at a 38% chance. Will the identity of Satoshi, the author of Bitcoin's white paper, be verified? Perhaps unsurprisingly, traders are predicting a less than 1% chance of this happening.
Trump stocks and cryptocurrencies rise
A further indicator that the shooting could work in Trump's favor in the long run is the market's reaction. For example, the cryptocurrency market has risen as Trump doubles down on his promise to be a “crypto president” if re-elected. Bitcoin rose 6% after the shooting at 6:15 p.m. ET, topping $63,000 on Monday morning for the first time in three weeks, according to data from CoinGecko. Similarly, crypto-related stocks have also risen. Shares of Coinbase Global, Marathon Digital Holdings and Riot Platforms are up 10%, 7% and 6%, respectively.
Similarly, the stock prices of companies owned by Trump are rising. Shares of Truth Social's parent company, Trump Media & Technology, rose 47% between Friday's close and Monday morning, then fell and are now trading at $41.35. Still, they're up 32% since last week. That's estimated to have added $1.8 billion to Trump's total wealth, according to The Telegraph.
This story originally appeared on Fortune.com.
