How Both Prediction Markets and Polls Missed the Mark on the French Election Results

This Week in Prediction Markets: Surprises and Speculations

Unforeseen Outcomes in French Politics

This past week, the world of prediction markets was taken by surprise, particularly with the unexpected results of the French elections. Initially, forecasts had heavily favored France’s right-wing National Rally party to dominate the National Assembly. Market predictions, aligning with polling data, gave them a 97% likelihood of securing the most seats. However, the final results painted a different picture; a robust get-out-the-vote campaign mobilized by the French left and strategic coalition partnerships led to the National Rally only managing a third-place finish behind President Emanuel Macron’s Ensemble and the UG Union of the Left.

In the aftermath, prediction markets did not foresee a scenario where France could be governed by a hung parliament — a situation that complicates domestic policy, including cryptocurrency regulations. As counts finalized, the debate intensified surrounding the fate of bets against the National Rally achieving a plurality. Some bettors argue the inclusion of coalitions in the ‘Liste des nuances’ means these should be considered as valid entities for determining election outcomes. High-stake participants on platforms like Polymarket, who speculated on this outcome, found themselves in a limbo with varying potential for a lucrative return based on the market resolution.

U.S. Presidential Race Odds: Biden’s Candidacy Under Scrutiny

As attention turns towards the U.S., speculations around President Joe Biden’s continuation in the presidential race have stirred the prediction markets. Despite Biden affirming his intention to stay in the race through various public statements and social media postings, the market remains unconvinced. His odds of securing reelection hovered around 11% post-interview, experiencing only a slight increase thereafter. Meanwhile, skepticism about his withdrawal persists, indicating a fragile confidence among traders concerning his candidacy.

This atmosphere is further compounded by Democratic strategists and donors who are seemingly reconsidering their support as the national convention approaches. Additional market activity suggests a significant anticipation of another major Democratic candidate emerging to challenge Biden, reflecting the volatile political climate.

Ethereum’s Price Trajectory: Speculative Highs and Lows

In the realm of cryptocurrency, Ethereum has been a primary focus for traders, especially with the expected rollout of Ethereum-based ETFs. Despite Ethereum currently trading above $3,000, the prediction market on Kalshi suggests a cautious outlook with estimates suggesting a dip to $2,600 by year-end, and possibly lower. This speculation aligns with the broader crypto market’s recent turbulence, influenced by factors including market sentiment and macroeconomic indicators. Bitcoin, for example, has not fared well either, marking significant declines reminiscent of the 2022 FTX crisis impact.

As traders and investors look towards potential supports such as ETFs, the real impact of these financial instruments on cryptocurrency prices remains to be seen. Historical data shows a mixed reaction to similar setups in the past, leaving the market to watch closely how these developments unfold in the coming months.

Conclusion

This week has been pivotal for both political and financial prediction markets. With unexpected turns in the French political landscape and ongoing uncertainties in the U.S. presidential race, along with speculative assessments of major cryptocurrencies, traders continue to navigate through a field of unpredictability and high stakes. These markets remain a critical barometer for gauging future scenarios, offering insights and opportunities based on unfolding global events.