In the dynamic landscape of U.S. politics, Vice President and presumptive Democratic nominee Kamala Harris is anticipated to reveal her vice-presidential pick by Tuesday. According to prediction markets, the frontrunner for this pivotal role is Pennsylvania Governor Josh Shapiro.

Traders on Polymarket, a blockchain-based prediction platform, have given Shapiro the highest probability of selection, with “Yes” shares trading at 68 cents on Monday morning in New York. This price suggests a 68% likelihood of Shapiro being named the Democratic vice-presidential nominee. Each share will pay out $1 (in USDC, a stablecoin pegged to the dollar) if the prediction is correct, and zero if it is not, with the bets executed via smart contracts on the Polygon blockchain.

Following Shapiro, Minnesota Governor Tim Waltz holds 23% odds, while other potential candidates remain in single-digit probabilities. The total betting volume on the Democratic vice-presidential contract has reached $104 million, making it Polymarket’s third-largest by volume.

Read more: David Plouffe Joins Kamala Harris’ Campaign, Infusing Crypto Savvy into Strategy

Governor Shapiro enjoys robust support in Pennsylvania, a critical swing state, with a 61% approval rating per a recent Fox News poll. However, he faces criticism from some left-wing Democrats due to his stances on Israel and school vouchers.

On PredictIt, a more traditional betting site, the trends mirror those on Polymarket, showing 66% odds for Shapiro and 26% for Waltz.

Polymarket, established in 2020, has seen a surge in activity, especially around election betting. Monthly volumes soared from June’s figures to $387 million in July, according to Dune Analytics.

Election Betting: A Window into Market Sentiment

Prediction markets allow participants to wager on real-world events’ outcomes, from political elections to sports and weather. Advocates argue that these markets offer a more accurate reflection of public sentiment and forecasting than traditional polls, as financial stakes incentivize thorough research and genuine beliefs.

Harris Gains Traction Against Trump

Recent trends in prediction market sentiment and polling data suggest the U.S. presidential race is becoming more a referendum on President Joe Biden’s unpopularity than an endorsement of former President Donald Trump. Harris has closed the gap with Trump in polling averages, tying him in aggregator 538’s metrics.

On Polymarket, bettors currently favor Trump at 53-44, although Harris has gained six percentage points over the past week. Traders are also betting on Harris overtaking Trump in RealClear Politics’ average, where Trump currently leads at 47.7% to Harris’s 46.9%.

Broader Market Implications

Markets assessing the potential shifts in political power show notable activity. Although a Republican sweep remains the highest-probability outcome at 30%, contracts favoring a Democratic presidential victory and control of at least one congressional house have seen gains. Additionally, a contract predicting Trump will win every swing state has decreased by four percentage points in the last week and 35 points in the last month following Biden’s missteps in debates.

The anticipated Trump-Harris debate, yet to be confirmed, could significantly influence market dynamics. Trump’s campaign has suggested an earlier debate on Fox News, featuring a live audience, while Harris’s camp has declined, with markets pricing in a 37% chance of a debate occurring before October 15.

Cultural and Economic Ramifications

The International Olympic Committee’s declaration that boxers Yu-Ting Lin (Taiwan) and Imane Khelif (Algeria) are biological females has sparked skepticism on Crypto Twitter, fueling betting on related outcomes. Although such cultural debates have not significantly shifted betting volumes compared to other sports, they have generated notable interest.

Interest Rate Speculations

The unwinding of the Japanese Yen carry trade has wreaked havoc in the crypto market, with over $1 billion in liquidations during Asian trading hours, causing ether to drop 20% and bitcoin 15%, erasing year-to-date gains. This turmoil has accelerated discussions about potential rate cuts in the U.S. Earlier this year, a majority of traders doubted significant cuts, with only a 60% chance of at most one cut.

Now, bettors on Kalshi, a regulated U.S. prediction market, anticipate a 100 basis point cut this year, with a 90% likelihood of the first cut post-September meeting. Polymarket bettors are even more bullish, assigning a 60% chance to an emergency Fed meeting occurring outside the regular schedule.

Traditional markets, via interest rate futures, have priced in a 100% chance of a 50 basis point cut by September’s Fed meeting, while Polymarket traders see only a 66% chance for the same.

Crypto Market Forecast

Despite the recent downturn, there are optimistic signals for the crypto market. Bitcoin, having briefly dipped below $50,000 during Asian trading hours, has rebounded. Kalshi bettors predict it may touch $44,000 at its lowest before year-end, while Polymarket participants give a 56% chance it will stay above $45,000 through August.

Keywords:

• Kamala Harris running mate
• Josh Shapiro vice-presidential pick
• Prediction markets election
• U.S. election betting
• Bitcoin and crypto market trends
• Federal Reserve rate cuts
• Interest rate futures