Viewpoint: Prediction markets exhibit "extreme information asymmetry and obvious arbitrage opportunities"

ME News, December 8 (UTC+8) — According to monitoring by 10X Research, blockchain-based prediction markets are attracting more speculators seeking returns beyond simply holding spot cryptocurrencies. Prediction markets are becoming the new speculative arena, resulting in “extreme information asymmetry and obvious arbitrage opportunities” between retail traders and professional data-driven traders.

The report notes that for quantitative traders, prediction markets can offer more advantageous asymmetric returns compared to the upside potential of spot tokens. For example, on the decentralized prediction market Polymarket, the “Yes” shares on whether BNB token will reach $1,500 by December 31, 2025, once traded at around $0.01, implying a potential 100x return if the event occurs.

However, the high win rates of some prediction market accounts have raised concerns about insider trading. Polymarket user AlphaRaccoon once made over $1 million in a single day by betting on Google search trends, successfully winning 22 out of 23 bets. In addition, Polymarket user ilovecircle has made over $2.2 million in profits over the past two months, maintaining a 74% win rate through bets covering politics, sports, and cryptocurrencies, and is suspected of using machine learning models for cross-domain arbitrage and automated trading. (Source: ME)