As Polymarket traders bet big on a Trump-Harris election faceoff and escalating conflicts in the Middle East, are they predicting a turbulent 2024, or are these bets overly dramatic?

Bets are placed

Decentralized betting platforms have seen a surge in popularity throughout 2024 as more users turn to them for insights into future events. 

These platforms allow people to predict outcomes in areas like politics, sports, and financial markets, with the added incentive of earning rewards for accurate predictions.

One platform that has become particularly popular is Polymarket. Since April 2024, Polymarket has experienced rapid growth, establishing itself as a key destination for crypto bettors seeking to anticipate what’s coming next across various sectors.

According to Dune Analytics, the platform’s monthly trading volume skyrocketed from over $39 million in April to an impressive $533 million in September, marking a jaw-dropping rise of over 1,267%. 

This growth shows no signs of slowing down. As of Oct. 3, Polymarket has already clocked in over $67 million in volume within the first three days of the month, suggesting the platform may surpass its own September record before the month ends.

Similarly, the number of active traders on Polymarket has seen a consistent rise. From around 2,690 in April, the platform surged to more than 90,000 monthly active traders in September.

Now, as we step into the final quarter of the year, some of the hottest contests on Polymarket are sparking intense speculation. What do these contests predict, and how could they shape the future? Let’s dive in to understand where the market sentiment is heading.

The presidential race: Polymarket’s biggest contest

Polymarket’s rise to fame can largely be attributed to the excitement surrounding the 2024 U.S. Presidential election. 

The platform’s biggest contest, “Presidential Election Winner 2024,” has already seen over $1.1 billion in bets since January, and the frenzy is expected to continue until the election concludes.

As of Oct. 1, the odds are extremely tight, with both Vice President Kamala Harris and Former President Donald Trump tied at 49%.

These numbers have fluctuated rapidly over the past few months. In July, Trump’s odds surged to 71% following an assassination attempt at a campaign rally near Butler, Pennsylvania. The incident led to a wave of support for Trump, but the boost was short-lived.

Since then, his chances have dipped, particularly after President Joe Biden dropped out of the race, positioning Harris as the Democratic frontrunner.

Despite Trump’s strong support for the crypto industry — including launching his own DeFi project, World Liberty Financial, and proposing a BTC strategic reserve for the U.S. at the BTC Conference—his odds haven’t rebounded to earlier highs.

While the race remains highly unpredictable, the odds reflect a near deadlock between Harris and Trump, suggesting that anything could happen as the election draws closer. The prediction space remains divided, leaving the outcome up in the air.

Middle East conflict

The Middle East is teetering on the edge of a larger conflict, and the war in Gaza, which has raged for nearly a year, has now drawn in powerful regional forces. 

Iran’s involvement has only intensified the situation, particularly after the assassination of Hezbollah’s leader, Hassan Nasrallah, on Sep. 27, in an Israeli airstrike. 

Nasrallah’s death, alongside that of IRGC commander Abbas Nilforoshan in the same strike, delivered a serious blow to Iran-backed militias. But it also set the stage for a fierce retaliation by Iran.

Just days after the assassination, on Oct. 1, Iran launched a massive missile strike on Israel, firing approximately 180 missiles. This latest exchange, which struck military bases, schools, and civilian areas in Israel, has only raised fears that a much larger regional war could be looming.

Polymarket users have been quick to react to the unfolding chaos. The prediction markets, which thrive on real-time events, have shown a shift in outlook. 

On Oct. 3, the odds of Israel taking military action against Iran by the end of 2024 shot up to 93%, a stark increase from the 54% odds on Oct. 1, mirroring the belief that Israel will likely retaliate with more than just defensive measures. 

But the predictions go deeper than just Iran. Hezbollah’s involvement, particularly following Nasrallah’s death, has placed Lebanon in the crosshairs. 

As Hezbollah is backed by Iran and deeply entrenched in Lebanon, many see Israeli action against Hezbollah as inevitable. Predictions on Polymarket reflect this sentiment. 

The odds of Israeli forces entering Lebanon jumped from just 11% on Sep. 30 to an overwhelming 100% by Oct. 3, pointing to growing fears that Israel’s strategy to counter Hezbollah’s influence will lead to a direct confrontation in Lebanon. 

Amid this, the possibility of a broader invasion is becoming more likely by the day. The prediction that Israel will invade Lebanon before November was relatively low in mid-September, sitting at only 10%. 

However, by the end of the month, those odds had jumped to 55%, and by Oct. 3, they had reached 89%, speculating that Israel, faced with growing threats from Hezbollah and Iran, will act sooner rather than later to protect its borders and neutralize potential threats.

With each new missile strike, assassination, and military action, the likelihood of a broader regional war increases, and Polymarket users are betting that the worst is yet to come.

Inflation and rate cuts

The global economy is experiencing volatile shifts and data from the U.S. and Europe suggests that inflation may finally be coming under control.

In the U.S., inflation has played a critical role in shaping the global economic narrative. The consumer price index (CPI) for August came in at 2.5% year-over-year, the lowest level since February 2021 and slightly below the expected 2.6%.

While this headline number suggests that inflation is cooling, a closer look reveals core inflation—excluding volatile components like food and energy—rose by 0.3% for the month.

In response, the Federal Reserve made a historic move on Sep. 18, cutting interest rates by 50 basis points, bringing the range down to 4.75-5% and injecting much-needed liquidity into the financial system. Investors are now speculating whether more cuts are on the horizon.

Polymarket users have been closely following these developments, with predictions about future Fed rate cuts fluctuating. 

As of Oct. 3, there’s a 63% chance of a 25-basis-point decrease at the November 2024 meeting, with a 31% chance of a more aggressive 50-basis-point cut. 

For December 2024, there’s a 51% chance of a 25-basis-point cut by year-end and a 39% chance of a 50-basis-point reduction.

These predictions show that while a 25-basis-point cut seems most likely, much will depend on how economic data evolves in the coming weeks. If this occurs, borrowing could become 0.5-1% cheaper by year-end.

Over in the Eurozone, inflation trends are following a similar path. September inflation fell to 1.8%, below the European Central Bank’s 2% target, marking the lowest level in three years. Key economies like Germany and France have reported similar declines.

However, core inflation in the Eurozone remained elevated at 2.7% in September, creating a complex scenario for the ECB.

Polymarket predictions show high confidence in ECB action, with a 94% chance of an interest rate cut at the upcoming meeting on Oct. 17.

Analysts note that while inflation may temporarily rebound due to energy price fluctuations from ongoing Middle East tensions, the overall outlook suggests it will remain below the 2% target for the foreseeable future. 

This has led many to believe the ECB will act quickly to prevent inflation from dropping too far below target, especially with growth slowing across Europe.

Crypto price predictions

The crypto market has been on a bumpy ride lately, with recent developments adding even more turbulence.

As of Oct. 3, Bitcoin (BTC) is hovering around $60,700, down about 5% over the past week amid a broader market-wide sell-off, largely driven by the escalating Middle East crisis. 

This price action reflects a major drop from its all-time high of $73,750, which it reached in March 2024. Since then, BTC has fallen by approximately 18%.

Currently, the odds of Bitcoin reaching a new all-time high by the end of 2024 sit at 48%, according to Polymarket predictions.

Meanwhile, Ethereum (ETH) has experienced an even sharper decline. Currently priced at $2,350, ETH is down 10% in the last seven days, showing more volatility than Bitcoin. 

Even more striking is Ethereum’s steep fall from its all-time high of $4,890, reached in November 2021. Since then, ETH has dropped a staggering 51%.

Polymarket predictions don’t paint a rosy picture of Ethereum’s immediate future. The odds of Ethereum hitting a new all-time high by the end of 2024 are slim, with only 11% of traders betting on a price surge, while 89% believe it will not hit a new high this year.

These predictions reflect the sentiment and concerns of a market that is increasingly wary of external factors. The Middle East crisis, for instance, has introduced new uncertainties. 

While crypto assets like Bitcoin are often seen as safe havens during times of financial instability, they have proven to be sensitive to broader economic shifts, especially when tied to critical geopolitical events.

How these dynamics evolve in the coming weeks will determine whether these digital assets can turn the tide or if traders’ cautious predictions will hold true.