How the prediction market prices the "impossible": $3.3 million wager reveals the truth about speculation

[Crypto World] The popularity of prediction markets has not waned in the past two years. A recent case is particularly interesting—on a certain prediction market, a contract related to a religious event in 2025 attracted about $3.3 million in funding, with participants mainly betting on whether the event would happen.

What was the outcome? The event was ultimately judged as “not happening.” Those who bet “will not happen” at the high point received an annualized return of about 5.5% by April, a rate that even outperformed US Treasury bonds during the same period. It looks like a stable arbitrage opportunity—putting money into prediction markets and still beating bonds.

But there’s a detail worth pondering: this contract once maintained a probability of over 3% for the “event happening.” What does this indicate? It suggests that, under the combined influence of market participants’ emotions, beliefs, and speculative desires, a relatively high price was assigned to an event with a very low probability. This is a characteristic of prediction market pricing—it’s not purely a rational probability machine but a battlefield of collective psychology.

Of course, this has also attracted criticism from academia. Some researchers believe that when prediction markets are used to bet on highly entertainment-oriented or symbolic events, it may weaken their informational value in serious public issues—simply put, if too many people treat them as gambling tools, it could undermine their fundamental function as an “information aggregation mechanism.”

Interestingly, the 2026 version of the contract has already been relisted, and the current market still assigns about a 2% chance to this event occurring. This reflects a persistent trait: as long as the narrative of “low probability, high return” persists, speculative capital will continue to flow in. The core appeal of prediction markets remains because they offer a place for “pricing uncertainty.”