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Polymarket Post-Election Trading Volume Plummets 80%

16 January 2025 Daily Feed Tags: , ,
Polymarket Post-Election Trading Volume Plummets 80%

Polymarket’s Post-Election Doldrums: A Crypto Betting Platform’s Rollercoaster Ride

Polymarket, a popular prediction market platform, saw its fortunes soar and then plummet after the November 5th US election. Here’s what happened:

  • Trading volume peaked at $2.6 billion during the election
  • November 2024 was 37,700% higher than November 2023
  • January 2025 witnessed a sharp decline to $515 million in trading volume

Polymarket, known for letting users bet on future outcomes with cryptocurrencies, experienced an unprecedented surge in activity during the election, with folks betting on ballot outcomes and political blunders. However, once the confetti settled, user engagement took a nosedive, dropping trading volumes from an impressive $2.6 billion in November to a modest $515 million by January 2025.

Let’s not forget that “Open interest” also took a 77% hit from November 6, 2024, to January 13, 2025, a clear indicator of how the market was feeling about Polymarket’s fortunes.

The Election Surge:

Polymarket’s trading volume, already on an upward trajectory, hit its zenith during the November 5th US election. The platform, which allows betting with Bitcoin and other cryptocurrencies, became the go-to spot for those looking to put their money where their political prediction mouths were.

“The surge in trading volume can be attributed to the rise in bets on predicting the outcome of the November 5 US election.”

Post-Election Reality:

After the political drama subsided, Polymarket’s user base seemed to lose interest, with trading volumes tanking. While elections come and go, the platform’s woes were just beginning, as other factors began to weigh on its market position:

Regulatory Scrutiny and Restrictions:

Polymarket CEO Shayne Coplan found himself in hot water with an FBI search in November 2024, signaling potential compliance issues. The platform also faced restrictions in Singapore, France, and Taiwan, limiting its expansion opportunities.

“Polymarket’s trading volume slumped by $2 billion in January from November.”

Regulation in the betting industry is no small matter. For platforms like Polymarket, the aftermath of the election brought not just a drop in interest, but also a harsh spotlight from regulatory bodies, which could have significant implications for similar ventures:

User Backlash:

Users didn’t just tune out; some voiced their discontent over Polymarket’s controversial betting options, particularly around bets on LA wildfires, perceived as profiting from others’ misfortunes.

Competition from Kalshi:

Then there’s Kalshi, a rival platform that managed to secure legal betting rights in the US, potentially diverting users away from Polymarket. While Polymarket’s offerings seemed to be hit-and-miss after the election, Kalshi’s legal blessing could make it a more credible choice for users:

Kalshi’s legal win to operate betting in the US might divert users by providing a more legit alternative to cryptocurrency betting.

Key Takeaways and Questions:

  • Why did Polymarket’s trading volume decrease significantly after the November election?

    After the high stakes drama of the US election, the platform saw a decline in user interest in less significant or less volatile events.

  • What challenges does Polymarket face besides a drop in trading volume?

    Regulatory scrutiny from authorities like the FBI, restrictions in several countries, user criticism, and market competition from other betting platforms.

  • How could Polymarket address its regulatory issues?

    The platform might need to work closely with regulators, develop more transparent betting categories, or expand into less controversial markets to mitigate risks.

  • What impact does the competition from Kalshi have on Polymarket?

    Kalshi’s legal win could divert users and potentially reduce Polymarket’s market share, especially if Kalshi offers similar or more appealing betting opportunities.

To reclaim its peak, Polymarket could diversify its offerings, perhaps steering away from betting on disasters and toward more socially acceptable topics. Transparency, compliance, and a dash of innovation might just be the recipe to keep the betting engine humming long after the election lights dim. And let’s not forget, in the world of Bitcoin, where decentralization and freedom reign, a platform like Polymarket should strive to reflect those values, even if the road ahead is bumpy.