Blockchain-based prediction markets are attracting a growing number of speculators as traders seek returns that exceed simply holding spot cryptocurrencies, a recent report indicates.
Prediction markets are becoming a new speculative environment for traders, pitting casual retail participants against data-driven professional traders, leading to “extreme information asymmetry and significant arbitrage opportunities,” according to a Monday report from crypto research firm 10X Research.
While sports betting constitutes the majority of activity on these platforms, Bitcoin (BTC) and events related to crypto outcomes are providing more niche opportunities that digital asset traders should consider, according to 10X.
“It is a crucial reminder that almost every major crypto trading venue has its own market-making or ‘treasury’ desk, not only to offer liquidity but to act on the opposite side of retail flow, often without incurring losses,” the company noted.
Related: BTC poised for December recovery on ‘macro tailwinds,’ Fed rate cut: Coinbase
For quantitative traders, prediction markets can provide asymmetric payoffs that compare favorably with the potential upside of underlying spot tokens, the report suggested.
For example, traders on the decentralized prediction market Polymarket are betting on whether the BNB (BNB) token will reach $1,500 by December 31. “Yes” shares in that market recently traded at about $0.01, suggesting a potential 100x payout if the event occurs. In contrast, a spot BNB holder would see an approximate 1.65x gain if the token ascended to that level from current prices.
Related: BitMine buys $199M in Ether as smart money traders bet on ETH decline
High win-rate accounts, AI bots raise Insider trading concerns
Nevertheless, some prediction market accounts are displaying alarming signs of insider trading, notably a recently emerged account that made over $1 million in a single day by wagering on Google search trends.
Polymarket user AlphaRaccoon earned $1 million by winning 22 out of 23 placed bets, according to crypto investors Haeju.
“This isn’t merely a lucky streak. He previously earned over $150K predicting the early launch of Gemini 3.0 before the results were public,” he mentioned in a Thursday X post.
Others are utilizing artificial intelligence bots to enhance their chances of winning.
Polymarket user “ilovecircle” has generated over $2.2 million in the last two months, boasting a 74% win rate across bets in politics, sports, and cryptocurrency.
The user’s volume and winning consistency “almost guarantees” that a machine learning (ML) model is being used for “cross-niche arbitrage and automatic trading,” noted prediction market trader Archive in a Sunday X post.
Magazine: Train AI agents to make better predictions… for token rewards
