The November 2 United States Presidential election is rapidly approaching, and the big question everyone is thinking about is will Trump continue to be President for 4 more years, or will Joe Biden win. On FTX, a popular crypto derivatives exchange, traders are betting that Biden will win.
Essentially, due to the relatively unregulated nature of FTX there are actually prediction contracts for who will be president. For example, there is a contract for if Trump will win, a contract for if Trump will lose, and a contract for if Biden will win, and the markets are constantly fluctuating.
Right now the FTX prediction markets give Biden a 60% chance of winning the Presidential election, and notably this is up 5% after this week’s Presidential debate. Also, open interest surged to $4 million after the debate.
Indeed, one of the most interesting aspects about the FTX prediction markets for the election is that the markets react in real-time to what is happening in the election. This data can be quite useful for determining how certain events, like the Presidential debate, are influencing the election.
Zooming out, prediction markets like this are an excellent example of how crypto technology can accomplish things that traditional finance cannot. Basically, the stock market is not allowed to have prediction markets like this, so stock traders cannot directly bet on who will win the election, but with FTX traders can directly bet on who will win the election and make money if they are right.
For example, if a trader thinks Trump will win, for every $0.40 they spend they will get $1 if they are right, so not only is the FTX prediction market interesting to watch to see how the election is progressing, but also there is a lot of money to be made.
Thus, the FTX Presidential election prediction market is one of the best examples of a crypto prediction market to date, with millions of dollars already on the line, and it will be interesting to watch how the market evolves as November 2 approaches.