In ascendency
Prediction markets are having a moment
Courting controversy, crypto and betting dominate the election conversation.
DraftKings influencer in crypto pump and dump row.
Coinbase predicted to reveal earnings decline later today.
Kraken goes down the layer-2 route with Optimism.
Hard to avoid
Done deal: Prediction market fever stepped up a gear this week after betting momentum all but placed Donald Trump back in the White House and as the meme stock world’s favorite app, Robinhood, jumped on the bandwagon.
Wheel of fortune: The move from Robinhood came on Monday when it announced its derivative arm would be offering contracts that let traders bet on whether Trump or VP Kamala Harris will be the winner in next Tuesday’s vote.
Robinhood said its contracts are offered via a deal with ForecastEx, a futures commission merchant regulated under the CFTC.
The markets will be available to US citizens only and Robinhood specified that anyone attached to the US presidential election or politics is forbidden from participating in the market.
Additionally, each bettor must be approved by Robinhood Derivatives in order to participate.
Flaunting it: Recall, the CFTC recently lost a legal attempt to shut down startup prediction market provider Kalshi, and its founder Tarek Mansour has lost no time in taking the opportunity to advertise its offerings including electronic billboards in Times Square and Las Vegas.
Kalshi also announced earlier on Monday it would be accepting crypto to fund accounts.
The other company making the running is blockchain-based Polymarket. It is similarly grabbing headlines with its market, which also appears to predict a Trump walkover.
It has been the subject of much speculation over the activity of whales, which, critics say, is distorting perceptions of the true odds of a Trump win.
Trump’s odds were cemented this week by the emergence of another $2m bet made in USC on a Trump victory.
It’s the markets what won it: Founder of Coinbase, Brian Armstrong, said on X that prediction markets, along with “long-form podcasts, social media/X,” were “deciding this election.”
Elon Musk has been retweeting Kalshi and Polymarket odds showing the likelihood of a Trump victory at ~67% as being “foretold in the prophecy.”
What we’re reading I: Those perhaps more able to separate emotion from the reality of betting markets are looking to exploit clear value anomalies. In Bloomberg.
What we’re reading II: “Trump can have an average polling figure of 48% and a 65% chance of winning at the same time; they’re measuring different things.” John Authers, again on Bloomberg.
The big mo: The sense of a crypto momentum play taking place even as the two candidates continue to push for votes is palpable. Just since the weekend, Decrypt reported that Trump’s crypto project, Word Liberty Financial, is rumored to be planning the launch of a stablecoin.
Decrypt noted such a move would come freighted with the potential for heightened risks alongside possibly greater rewards.
At the same time, Musk’s Dogecoin has become the best performing meme coin in the last 48 hours as he becomes even more enmeshed in the Trump campaign.
As sure as night follows day: Naturally, given the current levels of hype, the Bitcoin price has soared in the past 24 hours, up to over $72,000 late on Tuesday.
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Loose change
Blockchain developer Consensys is cutting 20% of its workforce due to economic and regulatory challenges. The business is currently fighting the SEC in court over the legal status of its tokens.
The operator of crypto exchange AurumXchange has been charged with money laundering and handling millions for the notorious darknet Silk Road marketplace by US officials.
Justice Department prosecutors allege that Maximiliano Pilipis, 53, processed over $30m through 100,000 transactions via AurumXchange, some of which involved accounts linked to Silk Road, between 2009 and 2013.
A new digital asset index series for accurate real-time data on the likes of Bitcoin and Ethereum in the Asia-Pacific region has been launched by Hong Kong Exchanges and Clearing.
Nigeria has freed Binance executive Tigran Gambaryan, who was detained in prison for more than seven months on money laundering charges. Crypto sector notables had lobbied the US government for Gambaryan’s release on health grounds.
Denmark’s Tax Law Council has floated new tax legislation aimed at Danish crypto investors, which would enter force from 2026.
Walking dead
Taylor can’t come to the phone right now: Influencer and DraftKings ambassador Taylor Mathis has responded to claims she manipulated the crypto market through her own fan token by deleting references to the online sportsbook on her social media platforms.
Mathis allegedly promoted the $TAYLOR to her followers, inflating its value before offloading her shares prior to the crash, which wiped 96% off the tokens value.
She later said she was clueless as to the project’s true intentions, stating, “I didn’t want to be involved with this,” adding, “I was trying to do the right thing.”
No comment: DraftKings have been sponsoring Mathis’ viral Walking Bets videos since September. The company has made no official comment.
Q3 earnings preview
Downward dog: Consensus estimates suggest Coinbase is set to see revenues decline 13% when it reports its Q3 numbers later today, Wednesday. Robinhood will also report later.
Uncertainty principle: The analysts said a further slowdown in spot trading accounts for the fall, partly triggered by a lack of catalysts for crypto and an uncertain regulatory environment heading into the presidential election.
Revenue is being forecast to fall to $1.26bn from $1.45bn.
Shake it out: “Volumes continued to soften through the quarter and we shake out quite a bit below the Street, largely on weaker retail transaction revenues,” said the team at Barclays.
In addition to lower revenue from trading fees, the analysts at JP Morgan expected lower revenue from the exchange’s staking services.
Kraken’s Ink plans
Glass half full: Crypto exchange Kraken's decision to build a layer-2 blockchain, to be called Ink, on Optimism's OP Stack framework came with a previously undisclosed grant from the Optimism Foundation.
CoinDesk reported that Kraken received 25m OP tokens, currently worth ~$42.5m.
The chain: By opting to go down the Optimism route, Kraken will become part of a fast-growing so-called ‘Superchain’ that also includes layer-2 networks from Coinbase, Sony and decentralized exchange Uniswap.
CoinDesk reported Andrew Koller, founder of Ink, as saying the number of OP tokens received as part of the deal was similar to various other deals that are part of the Superchain ecosystem.
“It was actually Optimism that proposed that number first, and it was very in line with what other Superchain participants have gotten,” Koller told CoinDesk.
How low can you go: In going down the digital ledger path, Kraken will be following the example of rival Coinbase, which debuted Base less than a year ago. Bloomberg reported that since then Base has become one of the largest DeFi platforms.
Events calendar
Oct 30-31: Chainlink SmartCon 2024, Hong Kong
Nov 11: DeFi World, Bangkok
Nov 21-23: Crypto Expo, Milan
Dec 4-5: India Blockchain Week, Bengaluru
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