A markets in the format "will X hit Y by Z" are given, where X is the cryptocurrency, Y is its price, and X is the end date. If X reaches a price of Y before the end date Z, the market is immediately resolved and closed.
A market has 2 kinds of shares: "Yes" and "No". Their cost varies depending on the demand from the users, which can buy and sell them as they wish.
The question is the following: Does the share price have a predictive power on whether a market will resolve to "Yes"? For example, if a share price for "Yes" is $0.80 (~$1 is the max price), how likely it is to resolve to "Yes"?
The question now has a variable A, a thersholding value ($0.80). It can get more complex by considering:
- B: the amount of datapoints in a row that are above the threshold.
- and C: the distance in time between datapoints under consideration
- D: market delta. If the price changes (grows) rapidly, or more slowly
- ...
There are many markets created for varying prices for a cryptocurrency to "hit". For example, $90k, $100k, $110k, $120k and so on. Typically, the share price is highest at one market, and falls down as the price Y gets more distant from the peak.
Cryptocurrencies can be unstable. Its price is falling or skyrocketing in a matter of days, several times a year.
The question is the following: Would betting to "Yes" in less likely markets where the share price is low (below $0.10) be a profitable strategy?