Polymarket Ignites "Conflict Trading": Middle East Tensions and Trump Remarks Become New Market Bets

While traditional analysts are still debating whether Brent crude will hit $110 or $120, the betting market has already spoken with real money: this conflict won’t be resolved quickly, and the market is pricing in a “long-term standoff.”

The Middle East conflict has not ended as expected in March. As the situation in Iran enters its fourth week, oil tanker traffic through the Strait of Hormuz has plummeted to just 1 to 2 ships per day, keeping international oil prices firmly above $110. Meanwhile, a prediction market platform called Polymarket is quietly becoming a frontline hub for traders worldwide to gauge geopolitical developments.

Recent data shows that Polymarket’s daily active users have surpassed 151,400, with trading volume over the past two weeks exceeding $1 billion—both hitting new records. What makes this blockchain-based prediction platform stand out amid turbulence?

1. The Market Has Completely Given Up on a “Quick Resolution”

● When Iran’s situation erupted on February 28, traders on Polymarket were optimistic—at that time, the market believed there was a 78% chance the conflict would end by March. A month later, that figure has plummeted to 4%.

● A recent report from China International Capital Corporation (CICC) cited Polymarket data, showing the market currently expects the highest probability of ending the conflict between April 1 and May 15, at 44%. This indicates that geopolitical tensions are not easing but are evolving from short-term emotional shocks into longer-term systemic risks.

● Northern Trust Chief Investment Officer Eric Freedman noted in a March 13 report that the information conveyed by prediction markets is very consistent: “The conflict will last more than days or weeks.” This revised expectation is directly reflected in asset prices: gold has fallen 15%, U.S. Treasury yields have surged to 4.4%, and volatility in U.S., Chinese, and Hong Kong stocks has hit its highest since April 2025.

2. Oil Price Battles: $100 Is the “Dividing Line”

● The direction of oil prices has become the most intense battleground in prediction markets. CICC analysts believe that $100 per barrel is a critical threshold—if oil prices stay above $100 into Q3 and Q4, the U.S. overall CPI will remain above 3.5%, meaning the Federal Reserve will be unable to cut interest rates this year.

● However, there is significant disagreement about the path of oil prices. The bond market, through interest rate expectations, envisions a scenario where the conflict persists into Q3 and Q4, with oil prices remaining above $100—this is considered the “most pessimistic” outlook by CICC. In contrast, equity markets have not priced in such an extreme scenario.

● A survey of global investment managers by Bank of America Merrill Lynch shows the average market expectation is for oil to be around $76 by year-end, with only 11% expecting it to exceed $90. This divergence in expectations implies both risks and opportunities.

3. Trump’s Remarks as a New Betting Variable: Downgrade or Escalation?

● On March 21, Trump posted on Truth Social hinting at a “gradual end” to U.S. military operations in the Middle East. This sparked a sharp market reaction: U.S. stock ETFs surged, and Brent crude oil prices fell from $112 to around $108.

● However, conflicting signals followed. Hours after Trump’s post, the Pentagon confirmed the deployment of thousands of Marines to the Middle East. Israel’s defense minister then emphasized that joint U.S.-Israel military actions would be “significantly strengthened.”

● Even more confusing, shortly after the “gradual de-escalation” comments, Trump issued a “48-hour final ultimatum” demanding Iran fully open the Strait of Hormuz, or else he would bomb its power plants. These contradictory statements left the market in a dilemma.

● Richard N. Haass, a former member of the U.S. National Security Council, commented: “Trump’s contradictory words and actions may be his new approach to the Middle East—although the U.S. has destabilized the region, others will bear the consequences.”

● Traders on Polymarket clearly did not buy into Trump’s de-escalation rhetoric. Data shows that the market’s expectation of the Strait of Hormuz returning to normal shipping by the end of April is only about 30%, and this probability has been declining in recent trading days.

4. Analysts Warn: Don’t Take Trump’s Words Lightly

In response to the market volatility triggered by Trump’s remarks, several institutions issued warnings.

● Caixin cited analysts who pointed out that although Trump publicly favors easing tensions, his military buildup in the Middle East is increasing, indicating that a quick resolution is unlikely. The term “gradual de-escalation” is often interpreted by military experts as the U.S. shifting from full-scale escalation to limited interventions, mainly airstrikes, while reducing the likelihood of ground invasions.

● From this perspective, Trump’s de-escalation comments do not guarantee a drop in oil prices. Given the ongoing conflict, the Strait of Hormuz is unlikely to resume normal flow soon. Analysts remain cautious, noting Trump’s inconsistent stance over the past three weeks and advising investors not to take his words at face value.

5. Polymarket vs. Kalshi: The Twin Titans of Prediction Markets

As geopolitical risks intensify, the value of prediction market platforms is increasingly evident. Currently, the two most prominent U.S.-based platforms are Polymarket and Kalshi, both regulated by the CFTC but with notable structural differences.

● Polymarket is a blockchain-based prediction market operating on the Polygon network, using USDC stablecoins for trading. Its advantages include transparency, speed, and very low costs, making it strong in emerging markets like global politics, cryptocurrencies, and geopolitical events.

● Kalshi is a fully regulated exchange approved by the CFTC, allowing direct fiat currency trading. It leads in macroeconomic areas (federal interest rate decisions, inflation data) and has deep market penetration within the U.S.

Both platforms are accelerating the mainstream adoption of prediction markets. Recent data shows Polymarket has 250,000 to 500,000 monthly active traders, with over 17 million website visits per month, and is projected to reach $18 billion in trading volume by 2025.

6. Industry Trend: Nasdaq Enters the Arena

The appeal of prediction markets is extending from crypto circles to traditional finance. On March 2, 2026, Nasdaq officially submitted an application to the SEC to launch binary options related to the Nasdaq-100 index. These “outcome-based options” are priced between $0.01 and $1, allowing investors to bet on whether specific events will occur.

This marks one of the largest Wall Street players entering the prediction market space. Although Kalshi and Polymarket have previously offered similar products under CFTC regulation, Nasdaq’s entry signals mainstream financial acceptance. If approved, it will be Nasdaq’s first foray into prediction markets.

7. Market Outlook: Focus on Three Key Variables

Amid ongoing developments in the Middle East, Northern Trust recommends investors monitor three major variables:

1. Federal Reserve policy signals

The March Fed meeting will release economic forecasts. While markets do not expect a rate adjustment, how the Fed generally describes the conflict and its expected duration will be a crucial signal.

2. Strait of Hormuz traffic

Since March 9, the rolling 7-day oil tanker traffic through the strait has remained at a low of 1 to 2 ships. When normal traffic resumes will be the most direct indicator of geopolitical risk easing.

3. Consistency of Trump’s remarks

From “gradual de-escalation” to “48-hour final ultimatum,” Trump’s repeated statements have been a direct driver of market volatility. Traders are pricing each of Trump’s statements on Polymarket—this political prediction theme is gradually becoming a new focus for users.

The Middle East conflict continues, and trading activity in prediction markets is rising. While traditional financial analysts debate how high oil prices will go, traders on Polymarket are already pricing every possible future with real money. Regardless of how the conflict ends, the prediction market—once a niche—proves its value amid geopolitical storms.