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jayhan88
@jayhan88
The Flaws of Prediction and Why Polymarket Might Not Be a Reliable Indicator for Crypto Market Movement Predictions often fail, particularly in financial markets. Why? Because making accurate predictions requires getting two critical variables right: X: What will happen (event) Y: How the market will react (market response) The formula "If X, then Y" sounds simple, but even the most intelligent persons frequently struggle to get both variables right. Currently, the U.S. election is seen as a significant factor influencing crypto market movements. The prevailing belief is that if Trump wins (X), it will be positive for crypto (Y). Conversely, if Harris wins (X), it could be negative for crypto (Y). Of note, crypto prices often correlate with the U.S. presidential odds on @polymarket , where less than 0.1% of the total American electorate wager on political outcomes. This small sample size makes Polymarket an unreliable predictor of events (X), and market reactions (Y) could also defy expectations (con't)
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jayhan88
@jayhan88
Consider the 2016 U.S. presidential election. The consensus was that (X) Hillary would win; and (Y) if not, a Trump presidency would cause market chaos and a stock market collapse. The reality? Both predictions were wrong. Trump won, and the stock market began to rally. Similarly, the upcoming U.S. presidential election could produce completely unexpected outcomes. We shouldn't reduce the analysis to a simple Trump-pro-crypto vs. Harris-anti-crypto narrative. What's more important is the potential for a recession and rate cuts imo. (con't)
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jayhan88
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In this scenario, we don't know exactly what will happen or how many rate cuts may occur (X). Furthermore, even if rate cuts do happen, they won't necessarily lead to a risk-on environment or a crypto bull market (Y). The only certainty is that we don’t know, and making predictions is mostly a losing game. Avoid relying on well-known traders, investors, or KOLs who make predictions with absolute certainty. Instead, regularly reassess your own thesis with a healthy dose of skepticism. Big opportunities and risks lie in the future. Enjoy riding the waves🌊
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