Blockchain-based prediction markets are attracting more speculators as traders seek returns that surpass just holding spot cryptocurrencies, according to a recent report.
Prediction markets are evolving into a new speculative space for traders, where casual retail participants compete against data-driven, professional traders, resulting in “extreme information asymmetry and significant arbitrage opportunities,” according to a Monday report from crypto research firm 10X Research.
While sports betting dominates these platforms, Bitcoin (BTC) and events related to crypto outcomes are offering niche opportunities that digital asset traders should not overlook, as indicated by 10X.
“It serves as a crucial reminder that nearly every prominent crypto trading venue has its own market-making or ‘treasury’ desk, not only to provide liquidity but also to counter retail flow, and rarely at a loss,” the company stated.
Related: BTC positioned for December rebound on ‘macro tailwinds,’ Fed rate cut: Coinbase
For quantitative traders, prediction markets can provide asymmetric payouts favorable compared to the upside of underlying spot tokens, the report noted.
For example, traders on decentralized prediction market Polymarket are betting on whether the BNB (BNB) token will reach $1,500 by Dec. 31, 2025. “Yes” shares on that platform were recently traded at around $0.01, suggesting a potential 100x payout if the event occurs. In contrast, a spot BNB holder would realize roughly a 1.65x gain if the token rises to the same level from current prices.
Related: BitMine acquires $199M in Ether as smart money traders bet on ETH decline
High win-rate accounts, AI bots raise Insider trading concerns
Nonetheless, some prediction market accounts are showing troubling signs of insider trading, particularly a recently emerged account that gained over $1 million in a single day by betting on Google search trends.
Polymarket user ‘AlphaRaccoon’ generated $1 million by successfully winning 22 out of 23 placed bets, as reported by crypto investor Haeju.
“This isn’t mere luck. He previously made over $150K predicting the early release of Gemini 3.0 before the results were announced,” he mentioned in a Thursday X post.
Others are utilizing artificial intelligence bots to enhance their winning chances.
Polymarkt user “ilovecircle” earned over $2.2 million in the past two months, boasting a 74% win rate through bets covering politics, sports, and cryptocurrency.
The user’s volume and consistent wins “almost ensure” that it is using a machine learning (ML) model for “cross-niche arbitrage and auto trading,” noted prediction market trader Archive in a Sunday X post.
Magazine: Train AI agents to make better predictions… for token rewards
