Welcome to our institutional newsletter, Crypto Long & Short. This week:
- Ryan Kirkley on how crypto prediction markets can risk incentivizing manipulation and amplifying misinformation at scale.
- The main headlines that institutions should pay attention to by Francisco Rodrigues.
- Geodnet decoupling suggests a fundamental rerating on the week’s chart.
Thanks for joining us!
-Alexandra Levis
Expert Perspectives
Prediction markets don’t just predict power: they reshape it
By Ryan Kirkley, Co-Founder and CEO of Global Settlement Network
Prediction markets are often presented as neutral forecasting tools: efficient ways to aggregate information and convert collective belief into a price. That case is not entirely wrong. Academic literature has long found that prediction markets can produce forecasts that outperform many conventional benchmarks. But as someone who believes in the role of cryptocurrencies in modernizing market infrastructure, I think we should be honest about what the sector is building here. The crypto version of prediction markets is no longer just about forecasts. It’s about financializing the instability of the real world.
That distinction matters. On Polymarket, for example, users can pool assets from Ethereum, Solana, Bitcoin, and other chains; those deposits are converted to USDC.e on Polygon, where fully backed yes/no positions are traded and settled on-chain as tokenized claims. In other words, cryptocurrencies don’t just host these markets. It gives them global reach, cross-chain financing, and low-friction deals. That’s some awesome market design. It is also exactly what increases social risk.
Once war, political violence, public disorder, or institutional collapse is converted into tradable cryptographic instruments, new incentives are created for bad actors. The first is obvious: insiders can try to monetize it. US regulators have long recognized that not all events belong in a financial market. CFTC Rule 40.11 prohibits contracts for events involving terrorism, murder, and war, among other categories considered contrary to the public interest. That is not moralizing against the market. It is a recognition that some contracts do more than reveal information; they can distort behavior around the underlying event.
The second problem is even more serious: prediction markets can reward people who are not only informed about an outcome, but are able to influence it. Academic research has warned that when traders have external incentives or can take actions that affect the underlying event, information aggregation can fail. A market is supposed to measure probability. But when the market itself becomes a source of incentives, it begins to reshape the probability it claims to observe.
That concern is no longer theoretical. Reuters reported this month that markets on the attacks on Iran and the overthrow of Ayatollah Ali Khamenei attracted ethical and insider trading scrutiny after unusually well-timed bets were flagged; In a separate report, Reuters noted that Polymarket removed bets on a nuclear explosion after public backlash. Even if only a small number of traders act on non-public information, the message to everyone else is corrosive: access, not knowledge, may be what is rewarded.
There is a third risk, and it is deeply crypto-native: these platforms increasingly function as media engines as much as markets. Axios reported in February that prediction market accounts were spreading false, misleading or context-free claims to millions of people on social media, turning market probabilities into viral narratives before the facts were established. When screenshots of weak or sensational markets circulate as “truths,” bad actors do not need to influence the event itself. They only need to influence the information environment around them.
For advisors and allocators, the mistake is to treat every liquid market as legitimate simply because price discovery exists. Cryptocurrencies have a lot of work to do: modernize settlement, improve transparency, and make capital markets more programmable. But building the most efficient avenues to speculate on war, regime change, or civic collapse is not financial innovation. It is a moral hazard on the scale of the Internet. Prediction markets do more than just forecast power. In its current crypto form, they reshape it by rewarding those most willing to exploit the instability.
Headlines of the week
francisco rodrigues
While this week has shown clear progress on the regulatory front, market anxiety coupled with AI disruption has begun to impact the crypto industry.
Chart of the week
Geodnet Decoupling Suggests Possible Fundamental Revaluation
Geodnet, a decentralized physical infrastructure network (DePIN) protocol that provides high-precision positioning for robotics and physical artificial intelligence, shows clear fundamental decoupling. While its price has been trending sideways alongside an underperforming DePIN index (down 3% from BTC, according to CoinDesk Data), monthly token burn has reached $500,000, currently neutralizing approximately 60% to 80% of new issuances. This divergence is driven by growing data revenues from autonomous drone fleets and humanoid robot developers. As the network transitions from infrastructure construction to a high-margin data layer for the machine economy, the current imbalance between supply and demand suggests a potential fundamental rerating.
Hear. Read. Look. Engage.
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Note: The opinions expressed in this column are those of the author and do not necessarily reflect those of CoinDesk, Inc., CoinDesk Indices or their owners and affiliates.
