10. Crypto and prediction markets

Crypto and prediction markets

Coins, perpetual futures, and markets that price the odds.

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  • 4 lessons
  • 16 min
About this chapter

This chapter covers two markets that trade around the clock and outside the classic exchanges: crypto coins and their perpetual futures (with funding, open interest and premium), and prediction markets and polls, where prices are probabilities of events.

What you will be able to do

  • Read a crypto board: price, 24-hour change, 7- and 30-day returns, volume, market cap, and tell coins from stablecoins.
  • Explain a perpetual future, its funding rate, open interest and premium, and why traders watch them.
  • Read a prediction market price as a probability, and know its limits.
  • Read a polling average and a single poll's margin of error.

How the chapter is built

Diagram: Crypto from zero: CRYP leads to Perpetual futures: PERP; Prediction markets: PM leads to Polls: POLL.

Five words to know before starting

coin (token)
a digital asset recorded on a blockchain
stablecoin
a coin designed to stay at 1 dollar
perpetual future
a futures contract with no expiry date
funding rate
the periodic payment between longs and shorts of a perpetual
implied probability
the chance of an event that a market price suggests
  1. 01Crypto from zero (CRYP)Crypto coins are digital assets recorded on public ledgers and traded around the clock on many venues, and CRYP lists the largest by market cap with price and changes.4 min
  2. 02Perpetual futures, funding and open interest (PERP)A perpetual future never expires and is kept close to its underlying by a periodic funding payment, and PERP shows a market's funding, open interest and premium over time.4 min
  3. 03Prediction markets (PM)In a prediction market a contract pays 1 dollar if an event happens and 0 if not, so its price in cents reads as the crowd's probability, and PM lists these markets by topic.4 min
  4. 04Political polls (POLL)POLL lists US political polls by type with date, subject, pollster, sample and result, and opens each one with its margin of error and the running average.3 min

Educational material about reading market data, not investment advice.