Manipulation in Bitcoin bets on Polymarket discovered

Researchers at Stanford University and Singapore Management University have found evidence that traders are manipulating the popular Bitcoin prediction markets on Polymarket. They do this by briefly influencing the Bitcoin price just before bets are settled, a new study reveals.

Bitcoin is available at OKX and Bybit.

How the manipulation works

The research team analysed around two months of trading data from the so-called five-minute Bitcoin bets on Polymarket. What they found is striking: in the final seconds before a bet closes, certain traders place large one-sided orders on Binance. This temporarily shifts the Bitcoin price towards the outcome they have bet on, after which the price quickly reverts to its previous level.

According to the researchers, this pattern repeats multiple times and cannot be attributed to chance. Bloomberg reports that the reference price for Bitcoin used by Polymarket to settle bets is deliberately influenced by a small group of traders.

821 suspected manipulators earned $8.2 million

The study identifies 821 suspected manipulators who together earned approximately $8.2 million in the affected markets. The bulk of the losses are borne by ordinary retail traders who unknowingly participate in the same markets. They are the victims of the coordinated price moves that determine the outcome of the bets.

The findings raise serious questions about the integrity of prediction markets such as Polymarket, which have grown strongly in popularity in recent years. When participants can temporarily steer the underlying price of an asset like Bitcoin for profit, it directly undermines trust in such platforms. Bitcoin currently stands at $64.000, a drop of 0.7% over the past 24 hours.