Prediction Markets Are Turning into a New Asset Class

Prediction Markets are Evolving

Citizens Bank has reported that prediction markets are transitioning from a niche asset class to an emerging asset class. The bank argues that event contracts address a significant gap in traditional finance. These structures provide investors the opportunity to trade directly on inflation, elections, Federal Reserve actions, and regulations.

Regulation and liquidity are among the challenges faced. However, prediction markets have the potential to evolve from retail-driven speculation into a mainstream hedging and information tool. Citizens anticipates that this evolution could reach a scale of several trillion dollars annually.