Polymarket traders predicted a 22.5% chance of Biden dropping out, although he affirmed he would stay, emphasizing the disparity with conventional views.
Prediction markets operate based on contracts paying out $1 if events occur, with increasing volumes seen recently, albeit influenced by crypto arbitrage over informed investors.
Despite successes, political prediction markets are faulted for heavy reliance on polls, giving rise to inaccuracies and dominated by noise traders rather than informed investors.
It's crucial not to overestimate the reliability of prediction markets based on singular successes, seeing weaknesses in forecasting political events due to inaccuracies in the underlying polls.
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