Polymarket, a predictions market that launched in 2020 and is based on the Polygon network, allows people to bet on the outcomes of future real-world events. When users place a bet on a binary outcome, such as whether Claudine Gay resigns as Harvard’s President before April, they receive a “Yes” or “No” contract, represented by a token.
The price of the contract reflects the odds and probability of an outcome. Once the trade is finalized, traders who predicted correctly will see their contract be worth $1, while the incorrect traders will see their shares become worthless.
What separates Polymarket from traditional prediction markets stems from crypto’s role in the platform. Crypto, and particularly USDC, is used to facilitate transparency, since all transactions are recorded publicly on a blockchain, according to Polymarket’s Learn page. “The blockchain also supports decentralization, eradicating the need for a central authority in trading, which fosters fairness and invites open participation globally,” writes Polymarket.
However, Polymarket does not allow U.S. residents to participate in its prediction markets, because of its 2022 settlement with the Commodity Futures Trading Commission (CFTC), which had ordered Polymarket to pay a $1.4 million civil monetary penalty for operating an illegal market.
Here are the top five crypto-related bets by volume on the predictions market currently:
1. Will BTC reach its all-time high by March 31, 2024?
Crypto traders think the largest cryptocurrency by market capitalization will not reach its all-time high by the end of March, wagering more than half a million dollars on the proposition.
At press time, traders see just an 8% chance that BTC will hit an all-time high by March 31, surpassing its previous high of roughly $69,000 reached in November 2021. That was compared to the start of the year when they saw a roughly 20% probability of BTC reaching its all-time high.
On January 10, the day that the U.S. Securities and Exchange Commission (SEC) approved multiple spot Bitcoin exchange-traded funds (ETFs), Polymarket traders placed odds of BTC reaching its all-time high at 30%, the highest probability yet recorded in 2024. Almost two weeks later, however, traders have become significantly less assured.
Bitcoin and the wider crypto market have been awash in a sea of red. Since Jan. 10, BTC has slid almost 15% to $39,900, while the global cryptocurrency market capitalization has dropped roughly 11% to $1.63 trillion.
Traders currently see a 92% chance that BTC will not return to its all-time high by the start of April. One trader commented on Polymarket, “I’ll use this [bet] to hedge against my position and would be glad to lose all my ‘no’ orders here if it means getting BTC to 70K and beyond.”
2. Will BTC hit $50,000 by January 31?
Speculators are even less confident that BTC will reach $50,000 by the end of the month, placing odds at just 3%.
By contrast, on January 11, right after the SEC’s ETF approvals, traders saw an 84% probability of BTC reaching the $50,000 mark by January 31.
Bitcoin’s price stood at nearly $48,500 on Jan. 11, just $1,500 below the target price level for this bet. While it was widely assumed that spot Bitcoin ETFs would be bullish for the price of BTC, the cryptocurrency has since fallen back to under $40,000 at the time of publication.
Unchained previously reported that financial analysts had pointed to the sustained outflows from the Grayscale Bitcoin Trust (GBTC), which was converted into a spot ETF, as a reason for BTC’s slump. With more than $28 billion initially in assets under management, GBTC has seen more than $3.4 billion in total outflows as of Tuesday morning, data from BitMEX Research shows.
As a result of BTC sliding after the ETF news, traders see a 97% chance that the cryptocurrency doesn’t reach $50,000 before the beginning of February, betting over $429,000 on this prediction contract.
3. Will Tether be insolvent in 2024?
The third largest crypto bet by volume on Polymarket is whether Tether, the largest stablecoin provider in the crypto ecosystem, will be insolvent in 2024. Traders have wagered almost $180,000 on whether Tether will file for bankruptcy this year, with 10% odds it will and an 89% chance it won’t.
Tether has had a long history of defending itself against uncertainty and doubts about the assets backing its flagship stablecoin USDT, which has a market capitalization of over $95 billion.
This prediction market went live a month after the S&P Global Ratings, one of the largest credit rating agencies globally, launched its stablecoin stability assessment, “which aims to evaluate a stablecoin’s ability to maintain a stable value relative to a fiat currency.”
In the assessment, largely driven by the quality of assets backing the stablecoin, the agency assigned Tether’s stablecoin USDT a poor score of “4 (constrained),” the second-lowest possible score, behind Gemini’s GUSD and Circle’s USDC which both received a score of “2 (strong).”
Tether’s USDT is the third-largest cryptocurrency behind bitcoin and ether. Despite its low scoring by the S&P Global Ratings, USDT was one of the safer stablecoins this past year when the collapse of Silicon Valley Bank and Silvergate Bank greatly impacted the crypto ecosystem.
Read More: Tether to Invest $500M in Bitcoin Mining
Circle’s USDC depegged to under 90 cents when people were concerned about Circle holding part of its cash reserves backing its USDC stablecoin in Silicon Valley Bank. Decentralized stablecoins FRAX and DAI also fell under their $1 peg. USDT, on the other hand, shifted to a temporary premium in March 2023, as people moved to Tether during the banking crisis.
“Tether truthers spent six years trying to convince everyone Tether would collapse and drag down the industry. It didn’t. Crypto had other problems, but they were fixated on the one thing that stood firm,” wrote Castle Island Ventures Nic Carter last week on the platform X, formerly known as Twitter.
4. Will the Blast bridge be exploited by the end of February?
Traders don’t see a high probability that the one-way bridge to Blast, an unfinished Ethereum layer-2 blockchain backed by crypto investment firm Paradigm, will suffer an exploit by the end of February.
At press time, traders see a 96% chance the one-way bridge will not suffer an exploit vs. a 4% chance the bridge is attacked successfully.
Risk-hungry investors have bridged over $1.2 billion in crypto assets to Blast, in hopes of generating additional yield and receiving an airdrop from the layer 2 blockchain that is scheduled to go live in March.
With more locked assets than long-standing blockchain networks such as Polygon, Optimism, and Avalanche, “hackers must be busy trying to exploit the @Blast_L2 bridge now,” wrote Cody Poh, investment associate at Spartan Capital on X in November.
The Blast-focused predictions market went live near the end of Nov. 2023 and is set to end in just over a month. While protocols within the crypto ecosystem have suffered from exploits since November, the bridge to Blast has not been one of them.
Traders have bet almost $137,000 on the outcome of Blast’s bridge.
5. Protocols on Solana airdropping by March 1?
The fifth-largest crypto prediction market by volume revolves around whether certain protocols on the Solana blockchain will airdrop tokens by the first day of March, with 30% betting on yes and 70% on no.
Traders have cumulatively bet more than $82,000 on whether the following Solana-based projects will carry out airdrops by March 1, 2024: Drift, marginfi, Kamino, Tensor, and Wormhole. Airdrops are when token issuers distribute tokens to people for free, often to reward early adopters.
During the last few months of 2023, Solana’s ecosystem was marked by a frenzy of excitement from several airdrops and enthusiasm for meme-based tokens. For example, Oracle network Pyth and liquid-staking service Jito both airdropped tokens to its users, while BONK, a token based on the Shiba-Inu dog breed, helped sell out Solana’s first crypto-enabled smartphone.