U.S. Secret Service Chief Probably Won't Be Fired, Polymarket Bets Signal

This week in prediction markets:

The Wall Street Journal's front page spelled it out clearly: "Trump Shooting Is Secret Service’s Most Stunning Failure in Decades."

But will heads roll?

Probably not, says a Polymarket contract asking if the director of the U.S. Secret Service will be fired.

"Yes" shares are trading at 29 cents, meaning the market sees a 29% chance that Kimberly Cheatle will no longer be in her job on Sept. 1, when the contract expires.

Each share pays $1 if the prediction turns out to be correct, and zero if not. The bets are settled in USDC, a stablecoin, or cryptocurrency pegged to the dollar, and programmed into a smart contract, or software application, on the Polygon blockchain.

Volume for this contract is thin, to be sure, just shy of $7,000, paling in comparison to the hundreds of millions riding on the outcome of the presidential election on Polymarket.

The shooting at Trump's rally Saturday created severe concerns about the Secret Service's planning. As the Journal reported, a nearby rooftop with an exposed view of the podium was not closed off prior, giving Thomas Matthew Crooks, identified by authorities as the would-be assassin, a vantage point. An eyewitness who spoke with the BBC claimed he spotted the gunman moments before shots rang out, compounding the narrative that this was a stunning failure on the authorities' part.

Congress is demanding answers.

The Secret Service slip-up has prompted lawmakers to propose enhanced protections, including for independent candidate Robert F. Kennedy Jr., who has relied on private security after being denied a Secret Service detail. Last September, an armed individual impersonating a U.S. Marshal was arrested at one of Kennedy's events.

The top holder of the No side of the Polymarket contract, who goes by the handle 69696969, also holds a $9,100 position taking the view that Biden will finish his term, and a $4,400 position that Trump will not be in prison before election day.

Other shooting-related contracts have popped up.

Bettors are saying there's a 94% chance the gunman was a rogue actor not affiliated with a larger entity ($27,510 bet), while there's an 83% chance his political leanings were Republican ($121,494). (Crooks was a registered Republican, but donated to a Democrat-leaning group.)

Trump's defiant fist was seen around the world in the moments after the failed assassination attempt in Pennsylvania.

Bettors on Polymarket believe this momentum will bolster his chances of re-taking the White House in November, as the "Yes" side of a contract asking if he'll win the election has edged past 70 cents to 71 cents, representing a 71% chance of his victory.

This is Polymarket's largest contract, with $258 million staked.

All the while, many of the largest traders on both sides of the debate kept their positions static, neither adding nor selling off their holdings.

The only two large traders that made any sort of move were Xav, who purchased almost $9,000 of the no-sided contracts starting an hour after the event, and GenMaiCha, who added over $16,000 on the Yes side the day following the shooting. Most of the new volume has come from new traders to the contract.

Bitcoin began the week strong, as a Trump bump pushed the world's largest digital asset up 7% to above $62,500.

As CoinDesk reported earlier, some market observers have said that the assassination attempt on the pro-crypto presidential candidate increased market speculation about his potential election victory, which is seen as favorable for the cryptocurrency market due to his supportive stance on crypto regulation.

Polymarket bettors are saying the price is stable, at least for now, as there's a 93% chance of it trading above $58,000 by the end of the week.

The next Federal Open Market Committee is scheduled for the end of July, and a weakening labor market could prompt the Fed to cut rates even though inflation is still above its 2% target, which, in turn, would be bullish for the price of risk assets including crypto.

And if not in July, there's a 79% chance of a Fed rate cut by September, according to traders on Kalshi, a U.S.-regulated prediction market site where bets are settled in greenbacks.

CORRECTION (July 15, 2024 16:08 UTC): Corrects price and probability figures in fourth paragraph.