Polymarket rife with ‘artificial trading,’ Columbia University researchers find

💡 DMK Insight

Wash trading concerns are heating up in prediction markets, and here’s why that matters for traders: With a staggering 60% of Polymarket’s volume potentially being wash trades, this raises serious questions about the integrity of market signals. For day traders and swing traders, this could distort price movements and lead to false signals, making it harder to gauge genuine market sentiment. If you’re relying on volume as a key indicator, you might want to reassess your strategies. The potential for artificial price movements could also spill over into correlated markets, affecting sentiment in broader crypto and betting sectors. On the flip side, if you’re a contrarian trader, this could present an opportunity. If the market reacts negatively to these findings, it might create a buying opportunity for those willing to take a risk on undervalued assets. Keep an eye on Polymarket’s trading volume and any regulatory responses that might emerge as a result. Watch for key price levels that could indicate a shift in trader sentiment, especially if volume starts to decline significantly.