Polymarket, an online prediction marketplace, has gained popularity during this year’s United States elections.
Reports suggest that users have placed bets worth over $2.7 billion, forecasting whether Trump or Kamala will win the 5 November presidential elections.
While Donald Trump leads at 65% against Kamala’s 34.9%, recent research has raised worries about Polymarket’s legitimacy and accuracy.
Source: Polymarket
Cryptocurrency research firms Inca Digital and Chaos Labs discovered widespread wash trading plagued the prediction’s platform.
The analytics platforms concluded that about 33.33% (one-third) of the trading volume on Polymarket was fake.
“Chaos Labs found that wash trading constituted around one-third of trading volume on Polymarket’s presidential market.” Wheeee! fortune.com/crypto/2024/10…
0:34 am · 31 Oct 2024
Political-tied cryptocurrencies, which have seen increased popularity during the 2024 US elections, reacted to Polymarket’s new allegations.
Trump tokens sink as researchers question Polymarket’s legitimacy
Meme coins have proven vital to the cryptocurrency market despite relying on hype with little-to-zero use cases.
The popularity has birthed different sub-categories, including dog-themed, cat-linked, and frog-tied tokens.
Meanwhile, the PolitiFi meme class has remained on the investor radar due to the much-awaited 2024 US presidential elections.
Political-tied saw renewed attention following Polymarket’s wash trading claims.
Data from CoinGecko shows the market capitalization of top PolitiFi coins plummeted 6.3% over the past day to $780 million.
It remains vital to watch out for a potential turnaround ahead of next week’s US elections.
A closer outlook reveals mixed performances, with Kamala Harris’ token continuing to outperform top Trump-linked assets.
KAMA gained 30% and 10% in the past week and day, while MAGA (TRUMP) surged 22% and 5% in those timeframes.
Meanwhile, Donald Trump-linked altcoins slumped significantly following Polymarket’s recent claims.
While Kamala’s KAMA and MAWA gained 10% and 4.5% the previous day, Trump’s cryptos contributed to the massive decline in PolitiFi assets market cap over the past day.
MAGA Hat (-8%), STRUMP (-7%), DMAG (-6%), and MAGA VP (-12%) have even underperformed Joe Boden, which remained stable with a slight 1.8% dip in the past day.
Also, the newly launched TRUMP 47 has crashed by 13% in the past hour as Polymarket’s wash trading allegations bite.
Furthermore, the significant decline in trading volume underscores faded enthusiasm around the coins.
Understanding wash trading
Wash trading is a type of market manipulation where a trader purchases and sells the same financial assets simultaneously to create a false impression about market activity.
Some cases encompass broker-trader collaboration, while other wash trades involve a trader acting as a buyer and the security’s seller.
Wash trading misleads investors by portraying higher trading volumes than the actual figures and remains illegal in the financial world.
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