Karshi app placed on a smartphone in New York, USA on Monday, February 10, 2025.
Gabby Jones Bloomberg | Getty Images
When I was anchoring CNBC’s “Squawkbox Europe” on Thursdays, the producers put this in the summary for me to read. In fact, as good books often do, it made me think a little.
“Bitcoin has fallen for the second day in a row, and as of this morning, the cryptocurrency is below the 71,000 level. Prediction markets expect the cryptocurrency to fall further, with Polymarket giving a more than 80 percent chance that Bitcoin will reach the 65,000 level this year.”
On the surface, this is just a read on how investors are trading a major cryptocurrency and where they think it will go next.
So far, so good. But there’s something more subtle within that that speaks volumes about how so many traders, rather than investors, walk away from betting on cryptocurrencies and find other shiny new toys to play with.
This phenomenon has been seen frequently in recent weeks, as gold, and especially silver, captivated the room.
Last week saw a violent move to the upside followed by a vicious decline that sent the previously fairly benign precious metals trading off the Richter scale.
In other words, the metal is capturing the speculation Bitcoin once had, having just fallen below $70,000 for the first time since November 2024.
It’s amazing that prediction markets like Polymarket and Kalshi are now tools that traders (and I emphasize using the word “trader” and not “investor”) use to express their opinions on cryptocurrencies.
Think about it. Investors are looking to profit from cryptocurrencies using prediction markets rather than trading the actual underlying asset, Bitcoin. That’s a big change!
The truth is, for many cryptocurrency proponents, buying cryptocurrencies has always meant making big profits and profiting from them.
Despite protests to the contrary, it was not meant to be a store of value in a world dominated by fiat currencies. It wasn’t a safe haven. And it certainly wasn’t about the means of exchange. But now, as margin calls and the fallibility of leverage expose the most aggressive risk-taking, much of the stated rationale for holding has faded.
In short, never underestimate the power of the zeitgeist. In the case of silver and prediction markets, it is a combination of centuries of trading and new trading methods, which Bitcoin’s suppliers are currently unable to accommodate.
Disclosure: CNBC has a commercial relationship with Kalsi.
