Prediction markets are becoming a new frontier in the crypto economy, where highly informed traders are competing with casual retail participants for profits.
A Tuesday report from 10x Research found that most users behave more like sports bettors than disciplined traders, “trading dopamine and narrative rather than discipline and edge.” The report noted, “Accuracy and profit are driven not by the crowd, but by a small, informed elite who price probabilities, hedge exposure, and extract premiums from retail-driven longshots.”
As liquidity and retail activity grow, professional trading desks are increasingly engaging in prediction markets to capitalize on spreads and the “misinformation asymmetry” created by this structure, 10x said.
The report is a concerning sign for casual traders looking to make easy money on prediction markets, as blockchain data suggests that most users lose their initial investment.
Only around 16.7% of wallets on Polymarket are in profit, while the remaining 83% show losses, according to blockchain data from Dune.
Perfect win rates raise insider trading concerns
The flawless records of certain prediction market accounts have sparked fears of potential insider trading. Some users appear to win nearly every bet they place.
Polymarket user pony-pony reportedly has a 100% win rate, earning over $77,000 in realized profits by betting on events linked to AI company OpenAI, according to Polymarket Money, a prediction market data aggregator, in a Monday X post.
Another account, AlphaRaccoon, drew similar scrutiny after making over $1 million in a single day by winning 22 of 23 bets tied to Google search trends, fueling allegations of insider activity.
Concerns are also rising over the accuracy of Polymarket data on third-party dashboards after a Paradigm researcher uncovered a bug that double-counts the platform’s trading volume, Cointelegraph reported Tuesday.
The bug artificially inflates key metrics used to track prediction market activity, including notional volume—the number of contracts traded—and cashflow volume, which measures the dollar value of trades at execution, Paradigm researcher Storm wrote in a Tuesday X post.
Importantly, the inflated figures stem from data interpretation errors, not wash trading—a deceptive and illegal practice where the same instrument is repeatedly bought and sold to create the illusion of market growth.
Paradigm confirmed that the bug affected multiple data dashboards, including AlliumLabs and DefiLlama, which are now updating their Polymarket displays to correct the double-counting issue.
