Prediction Markets vs Crypto Trading: Understanding the Key Differences

Prediction markets have gained popularity in recent years, particularly with the emergence of platforms like Polymarket. These platforms enable traders to speculate on real-world events, such as elections or regulatory decisions affecting cryptocurrency markets.

However, prediction markets differ significantly from traditional crypto trading via CFDs (Contracts for Difference). CFD trading involves speculating on price movements without owning the underlying assets, whereas prediction markets focus on event outcomes.

The key differences between Polymarket and crypto CFD trading lie in their payoff structures and risk management capabilities. Prediction markets have a binary outcome structure, where traders win or lose based solely on whether the predicted event occurs. In contrast, crypto CFDs offer scalable profits tied to price movements.