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- CNBC’s Steve Sedgwick spoke on “Squawkbox Europe” about how prediction markets are betting on bitcoin’s continued fall.
- He calls it an “extraordinary” development: traders are now using the markets to express their view on crypto, rather than actually trading it.
- For all the rationale crypto, it shows how trading it was always “about making some serious money to the upside,” he writes.
As I was anchoring CNBC’s “Squawkbox Europe” on Thursday, my producers put this in my rundown for me to read. It made me think a bit, as indeed all good reads tend to do:
“Bitcoin is tumbling for the second straight day, with the cryptocurrency falling below the 71-thousand mark earlier this morning. Prediction markets are betting the cryptocurrency will see even more declines, with an over 80-percent chance on Polymarket that Bitcoin will hit the 65-thousand mark this year.”
On the surface, it’s just another read on how investors are trading the major cryptocurrency and where they think it will go next.
So far, so good. But there’s something more subtle in it that speaks volumes about the way so many traders, and not investors, have moved on from betting on cryptocurrencies and found other, shiny new toys play with.
The phenomenon has been abundant over the last few weeks, as gold and especially silver were captivating the room.
Trading in the previously fairly calm precious metals went off the Richter Scale, as the pair saw wild moves to the upside and then a vicious retrenchment last week.
In short, the metals are capturing the speculation that bitcoin, which just fell below $70,000 for the first time since November 2024, used to have.
It’s extraordinary that prediction markets like Polymarket and Kalshi have now become a tool used by traders — and I emphasize the use of the word “traders” rather than “investors” — to express their views on crypto.
Think about it: Punters are using prediction markets to try and make money out of crypto, rather than trading the actual underlying bitcoin. That is a big change!
The truth is: For many crypto advocates, buying them was ALWAYS about making some serious money to the upside.
Despite protestations to the contrary, it wasn’t about it being a store of value in a world dominated by fiat currencies. It wasn’t a safe haven. And it certainly wasn’t about a means of exchange. Now though, a lot of those stated rationales for owning have faded as margin calls and leverage fallibility expose the most aggressive risk-taking.
In short, don’t ever underestimate the power of the Zeitgeist. In the case of silver and prediction markets, it’s a mix of a centuries-old trade and a new way of trading, which the purveyors of bitcoin, for now, are failing to match.
Disclosure: CNBC has a commercial relationship with Kalshi.