BlockBeats reported on Aug. 25 that, according to TradingBeats, formerly Hyperinsight, Polymarket trader 「TwoEyes」 spent four consecutive days betting that the Federal Reserve will not raise rates in September, then flipped to shorting the Nasdaq.
From the morning of Aug. 22 to early Aug. 23, the trader made 149 purchases worth about $113,700 in a market pricing no change in September rates, with a weighted average entry probability of about 68.42%. Early on Aug. 25, the trader added another roughly $10,050 at an average 67% probability, again betting that the Fed will not deliver a 25-basis-point hike in September. The two new allocations came to about $123,700 in total.
As of publication, the probability of 「no rate change in September」 stood at 66.5%, while the probability of 「no 25-basis-point hike in September」 was 67.5%. The trader’s two core prediction-market positions carried a combined cost of about $151,200 and were showing an unrealized loss of roughly $4,168.
About six hours after the latest round of prediction-market buying ended at 4 a.m., an associated address began building a Nasdaq short on Hyperliquid. The address is currently short 51.6369 XYZ100 contracts with 30x full-position leverage, with position value at about $1.5108 million. XYZ100 was quoted at 29,258 points, leaving the position down about $10,800, with a return of about -21.69% and a liquidation price of 38,444.8 points.
Prediction-market profits could serve as limited upside insurance
Put together, the roughly $151,200 prediction-market exposure acts as a limited hedge for a Nasdaq short that is about ten times larger, at roughly $1.51 million.
If the Fed keeps rates unchanged in September, the two core prediction positions would pay out about $220,200. Based on current position costs and excluding fees, the maximum profit would be about $69,100. Since the 51.6369-contract XYZ100 short would lose about $51.64 for every one-point rise, that profit could absorb roughly 1,337.5 points of upside, equal to about 4.6% from the 29,048-point entry level. The corresponding static break-even point would be around 30,385.5 points.
XYZ100 has already climbed to 29,258 points, which has used up about 210 points of that buffer. At the current price, and assuming the 「no rate change in September」 outcome is realized, the remaining profit from the prediction positions would still cover about 1,127.5 points of upside in the Nasdaq short, or about 3.85% of room for a wrong-way move.