Key Takeaways
- Prediction markets surged during geopolitical tensions.
- Ethical and regulatory concerns are intensifying.
- Bitcoin’s “digital gold” narrative faces scrutiny.
Escalating geopolitical tensions in the Middle East have triggered a surge in activity across a controversial new corner of the crypto industry — prediction markets.
As traders poured hundreds of millions of dollars into the new platforms, Bitcoin — often described by supporters as “digital gold” — showed little of the safe-haven rally typically expected during geopolitical crises.
The contrast has raised fresh questions about Bitcoin’s role in the global financial system.
War Speculation and Prediction Markets
Blockchain-based prediction platforms such as Polymarket and Kalshi recorded large inflows during the recent escalation in U.S.–Iran tensions, as traders placed bets on potential military strikes, diplomatic outcomes and regional escalation.
Lawmakers said more than $500 million was wagered on contracts linked to the timing of possible U.S. military action against Iran, reflecting the rapid rise of event-based markets tied to geopolitics.
Such platforms allow users to trade contracts whose value depends on whether a specific event occurs — for example whether a conflict escalates or whether a government action happens before a certain date.
Supporters argue that prediction markets can aggregate information more efficiently than traditional polling or forecasting, but critics say they create incentives to profit from human suffering.
Ethical Concerns
Experts say the growing popularity of war-related betting raises significant ethical and legal questions.
Karoline Thomsen and Professor Douglas Guilfoyle of the University of New South Wales Sydney warned that allowing markets tied directly to conflict risks turning human tragedy into financial speculation.
“Gamblers can now bet on the outcome of wars — and that’s a problem,” they wrote in a recent analysis, arguing that such markets blur the line between forecasting and exploitation.
They also raised concerns that sensitive information about military operations could become financially valuable if traders believe they can profit from early knowledge of geopolitical developments.
That risk, they said, could encourage attempts to obtain insider or classified information tied to military decisions.
Lawmakers Move To Curb War-Related Betting
The surge in war-linked trading has already drawn attention from U.S. lawmakers.
A bipartisan bill introduced this week — the Discouraging Exploitative Assassination, Tragedy, and Harm Betting in Event Trading Systems Act, or DEATH BETS Act — aims to ban prediction-market contracts tied to war, terrorism, assassinations or individual deaths.
Supporters say the legislation is needed to prevent traders from profiting from tragedy and to reduce national-security risks.
“Betting on war and death should be illegal,” said Representative Mike Levin, who introduced the bill alongside Senator Adam Schiff.
Schiff said such markets could create incentives for insiders to profit from classified information, potentially jeopardizing national security.
The proposal would explicitly bar exchanges regulated by the Commodity Futures Trading Commission from listing contracts linked to violent geopolitical events.
Prediction Markets vs Bitcoin
While prediction markets thrived during the crisis, Bitcoin — marketed by supporters as “digital gold” — failed to show the type of safe-haven rally some investors expected.
Historically, major geopolitical shocks have triggered sharp moves in crypto markets, but the latest tensions produced only muted price reactions in Bitcoin and Ethereum.
According to Erik Norland, chief economist at CME Group, the relationship between crypto and traditional safe-haven assets such as gold remains surprisingly weak.
Crypto assets have shown near-zero correlation with both gold and the U.S. dollar, suggesting their value may be driven more by internal market dynamics than macroeconomic stress.
Norland also pointed to structural limitations within the bitcoin network.
Bitcoin processes only three to seven transactions per second, far slower than newer blockchains capable of handling thousands, raising questions about whether other tokens with real-world utility could eventually capture more economic activity.
Bitcoin Outlook Clouds Digital-Gold Narrative
Despite surges in prediction markets, indicators suggest Bitcoin’s current rally may be losing momentum.
Data from blockchain analytics firm CryptoQuant shows Bitcoin whales — large holders who often influence market trends — have increasingly moved funds onto exchanges, a pattern typically associated with selling pressure.
The exchange whale ratio, which measures large transfers into exchanges, has risen to 0.55, indicating greater distribution by major holders.
According to CCN analyst Abiodun Oladokun, the combination could signal a short-term pullback if buying pressure does not strengthen.
Bitcoin’s price may fall toward support near $65,071, with a deeper decline toward $60,000 possible if that level breaks.
However, a decisive breakout above its current trading range could push prices higher toward around $75,300, analysts said.
Kurt Robson is a London-based reporter at CCN, specialising in the fast-moving worlds of crypto and emerging technology. He began his career covering local news in Cornwall after graduating from Falmouth University with First Class Honours in Journalism. There, he cut his teeth on everything from council meetings to missing swans.
He quickly rose through the ranks to become a frontline journalist at several of the UK’s leading national newspapers. Over the years, he has interviewed musicians and celebrities, reported from courtrooms and crime scenes, and secured multiple front-page exclusives.
Following the upheaval of the COVID-19 pandemic, Kurt shifted his focus to technology journalism—just ahead of the AI boom. With a natural curiosity and a trained eye for emerging trends, he has found a new rhythm in reporting on innovation.
At CCN, Kurt's work focuses on the cutting edge of crypto, blockchain, AI, and the evolving digital world. Drawing on his background in people-first reporting and his deep interest in disruptive tech, Kurt delivers stories that are insightful, entertaining, and human-centric.
