Prediction markets may go mainstream, a new Bernstein report suggests

Prediction markets may get wider mainstream adoption, a new report from Bernstein points out. According to analysts, prediction markets are a viable asset class, with the potential to be backed by new capital and real users. 

The report suggests the markets may emerge as a new asset class, backed by inflows of capital. Prediction markets have already achieved sufficient regulatory approval to be offered as a retail option through finance apps. 

Prediction markets may also replace the lost crypto volumes and boost apps like Robinhood. Mainstream adoption may happen through other partnerships and retail integrations, reported Bloomberg. 

The Bernstein report revealed that predictions are growing from their initial stage as a novelty app and can soon be built into mainstream finance. One of the drivers is the US market, where the regulatory landscape was relaxed, avoiding the limitations of gambling. 

Kalshi and Polymarket drive the prediction market’s mainstream shift

Bernstein analysts revealed that Kalshi and Polymarket remain central players, becoming the first to move prediction markets from low-popularity apps to accessible mainstream products. 

‘By letting markets decide probabilities for key events, more mainstream investors can factor these information signals in their portfolios,’ commented Bernstein analysts.

According to the experts, prediction markets may become a key gauge on social media, as an arbiter of truth. Political polarity and AI content have skewed influences on social media, and prediction markets can show a result closer to the truth, due to the requirement to pay for the predictive position. 

The two apps opened the door to other markets, with plans for launching predictions on crypto platforms like Coinbase. The Binance ecosystem has not yet picked a prediction market, though there are speculations of potentially picking a newly emerging prediction app.

Robinhood and Coinbase may tap trader base for predictions

Until recently, prediction market users were just one class of crypto traders. As many sources of growth in crypto stagnated, Robinhood and Coinbase may redirect their user base to predictions. The addition of prediction markets may also boost the stock outlook for HOOD to $160 and for COIN to $510. 

The two platforms may gain a first-mover advantage, while others, like Interactive Brokers, try to spread their native apps. Trum Media also plans to launch a prediction market and integrate it with the Truth Social platform. 

Overall, prediction markets are moving away from fringe bets, making it acceptable to predict current events and even move into short-term predictions. The faster resolutions of a prediction market replaced uncertain bets on tokens or other assets, replacing them with more easily recognizable opportunities in news, sports, and short-term asset pricing. 

The biggest obstacle is the still relatively low volumes. While some topics go viral, even those markets are relatively illiquid. The life-changing fortunes of the US Presidential elections market are now in the past, leaving the platforms as a location for retail predictions and small-scale trading. 

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