Trump’s meme tokens bleed as Polymarket faces wash trading allegations

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Written on Oct 31, 2024
Reading time 3 minutes
  • Recent research has questioned Polymarket’s legitimacy in forecasting the US election outcome.
  • Analysts discovered that rampant wash trading plague the prediction site.
  • Trump-linked cryptos have plunged amidst the claims.

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Polymarket, an online prediction marketplace, has gained popularity during this year’s United States elections.

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Reports suggest that users have placed bets worth over $2.7 billion, forecasting whether Trump or Kamala will win the 5 November presidential elections.

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While Donald Trump leads at 65% against Kamala’s 34.9%, recent research has raised worries about Polymarket’s legitimacy and accuracy.

Source: Polymarket

Cryptocurrency research firms Inca Digital and Chaos Labs discovered widespread wash trading plagued the prediction’s platform.

The analytics platforms concluded that about 33.33% (one-third) of the trading volume on Polymarket was fake.

Political-tied cryptocurrencies, which have seen increased popularity during the 2024 US elections, reacted to Polymarket’s new allegations.

Trump tokens sink as researchers question Polymarket’s legitimacy

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Meme coins have proven vital to the cryptocurrency market despite relying on hype with little-to-zero use cases.

The popularity has birthed different sub-categories, including dog-themed, cat-linked, and frog-tied tokens.

Meanwhile, the PolitiFi meme class has remained on the investor radar due to the much-awaited 2024 US presidential elections.

Political-tied saw renewed attention following Polymarket’s wash trading claims.

Data from CoinGecko shows the market capitalization of top PolitiFi coins plummeted 6.3% over the past day to $780 million.

It remains vital to watch out for a potential turnaround ahead of next week’s US elections.

A closer outlook reveals mixed performances, with Kamala Harris’ token continuing to outperform top Trump-linked assets.

KAMA gained 30% and 10% in the past week and day, while MAGA (TRUMP) surged 22% and 5% in those timeframes.

Meanwhile, Donald Trump-linked altcoins slumped significantly following Polymarket’s recent claims.

While Kamala’s KAMA and MAWA gained 10% and 4.5% the previous day, Trump’s cryptos contributed to the massive decline in PolitiFi assets market cap over the past day.

MAGA Hat (-8%), STRUMP (-7%), DMAG (-6%), and MAGA VP (-12%) have even underperformed Joe Boden, which remained stable with a slight 1.8% dip in the past day.

Also, the newly launched TRUMP 47 has crashed by 13% in the past hour as Polymarket’s wash trading allegations bite.

Furthermore, the significant decline in trading volume underscores faded enthusiasm around the coins.

Understanding wash trading

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Wash trading is a type of market manipulation where a trader purchases and sells the same financial assets simultaneously to create a false impression about market activity.

Some cases encompass broker-trader collaboration, while other wash trades involve a trader acting as a buyer and the security’s seller.

Wash trading misleads investors by portraying higher trading volumes than the actual figures and remains illegal in the financial world.

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