- Crypto saw significant losses over night with Ethereum losing 5%
- Betting markets like Augur and Polymarket are up as bettors attempt to predict the US election.
- Stock markets are quietly optimistic about a Biden win and Democrat clean sweep.
Crypto is not happy. The last 24 hours saw a brutal red sweep across the global markets as nearly all projects suffered sustained losses.
Some $15 billion has been wiped from the market cap of all projects, but some projects managed to buck the trend.
Chief among them is Augur, the prediction market. It’s token the REP has been creeping up in value as people use the platform to place their bets on the outcome of the US Election.
While mainstream polling has Biden taking the White House – the Economist says Trump has just a 4% chance of getting back in – the picture is far more mixed in crypto.
On the Ethereum-based prediction platform Polymarket, it’ll cost you $0.38 to bet on him (equating to a 38% probability) versus $0.62 for Joe Biden. So far $3 million has been bet on Polymarket.
On Augur, there are several open markets betting on the election. One has Trump at 42.8% with just $500,000 worth of bets placed.
While it’s possible that users of these prediction markets have sufficiently factored polls into their thinking, it’s equally possible some are betting with their heart (or fears) instead of with their head (or an algorithm).
But given the rise of decentralized finance and crypto arbitrage, it’s well-established that cryptocurrency users are always looking for an advantage.
Markets looking for clarity
Over in the stock markets, futures have been quietly optimistic as the American public heads to the polls.
Contracts on the Dow ticked up 0.2%, following a rally of more than 420 points, or 1.6%. S&P 500 and Nasdaq futures each also had an uplift in late trading.
But some analysts are suggesting the outcome of the US election will not be decided as quickly as has been the case in previous years.
With a surge of mail-in votes cast this year-nearly 100 million Americans have already cast their votes via post-many states including battlegrounds such as Pennsylvania will be given three extra days after the election to count all the votes.
As of Monday, last-minute polling has Biden leading nationwide, but in key swing states, the picture isn’t as clear, with some modelling suggesting Trump could hold on to power for four more years.
The key points of concern for the markets, however, appear to be what combination of power will be shared between Republicans and Democrats. If the Democrats win the election and take the Senate, many are expecting a round of large-scale fiscal stimulus along with boosts to clean energy, transport and housing.
If Biden wins but the Republicans hold the Senate – and are able to block the President from passing legislation – many think large-scale spending will fail to materialise.
If Trump wins but the Senate goes the other way, things could be even worse from a stimulus perspective, but beneficial from a deregulatory point of view.
Pick your poison.
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