Polymarket Reports December Rate-Cut Odds at 87% as Crypto Stocks Surge

As the odds for a rate cut in December rise to 87% on Polymarket, several crypto-linked stocks have seen significant increases. This article explores the relationship between Federal Reserve statements and the current landscape of cryptocurrency investments, the notable shifts in market sentiment, and the increasing prominence of prediction markets in the financial sector.

Key Takeaways

Polymarket now estimates the probability of a US rate cut in December at 87%, the highest this month.
Three major Bitcoin mining companies—Cleanspark, Riot Platforms, and Cipher Mining—demonstrated strong gains recently.
Fed officials’ comments significantly influence market sentiment, shifting odds for rate cuts.
Prediction markets are gaining traction, fostering partnerships and new platforms within the crypto space.

Crypto Stocks Rise With December Rate-Cut Optimism

On Friday, several stocks associated with the cryptocurrency sector experienced an upswing as Polymarket indicated an 87% chance for a rate cut in December, marking the highest prediction for this month. Leading this rally were three Bitcoin mining companies, Cleanspark, Riot Platforms, and Cipher Mining, all achieving notable gains, particularly over the past five days.

Probability of a US rate cut in December. Source: Polymarket

In early trading, data from Yahoo Finance showed that Circle, the company behind USDC, experienced a nearly 10% jump, while strategies from Michael Saylor and Coinbase saw more modest improvements during this timeframe.

Market Volatility Driven by Federal Reserve Remarks

The fluctuations in prediction-market prices this month have predominantly been influenced by comments from officials at the Federal Reserve. On October 29, Fed Chair Jerome Powell indicated that a rate cut in December was "not a foregone conclusion," which was interpreted by investors as a hawkish sentiment. This led Polymarket’s odds to drop from 89% the previous day down to as low as 22% by November 20.

However, sentiment shifted on November 17 when Fed Governor Christopher Waller suggested that the central bank should contemplate rate cuts next month, citing the weak labor market and inflation nearing the Fed's 2% target.

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Growth of Prediction Markets Amid Rising Interest

Prediction markets, including Kalshi and Polymarket, which allow users to bet on the outcomes of real-world events, are experiencing notable growth this year. On November 13, Polymarket announced a multi-year agreement with TKO Group Holdings to become the official prediction-market partner for the Ultimate Fighting Championships and Zuffa Boxing. This partnership quickly followed another with North American fantasy sports platform PrizePicks.

In November, Kalshi secured $1 billion in funding from Sequoia Capital and CapitalG, bringing its valuation to $11 billion, reported TechCrunch. This funding comes on the heels of a $300 million round raised in October.

Rumors surfaced on November 19 that Coinbase is developing its own prediction-market platform, supported by screenshots shared by tech researcher Jane Manchun Wong. These indicated that the offering could be integrated with Coinbase Financial Markets and backed by Kalshi.

Source: Jane Manchun Wong

In a statement on Wednesday, Robinhood reported that prediction markets have quickly become one of its fastest-growing revenue sources, with over one million users trading nine billion contracts since its launch in March through a partnership with Kalshi.

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