Does the prediction market spell a death sentence for Iran's political situation? The triple risks behind Polymarket's 56% probability

Traders on Polymarket are betting real money on the political risk in Iran. The latest data shows that the probability of Iran’s Supreme Leader Khamenei stepping down before the end of this year has risen to 56%, an increase of 21 percentage points in just a few days. Behind this number, it reflects not only a prediction but also the market’s immediate reaction to the dramatic changes in Middle Eastern geopolitics.

Chain of Events: From Venezuela to Iran

External shocks trigger chain reactions

According to the latest news, U.S. military actions against Venezuela have become the catalyst for this round of risk reassessment. Iran and Venezuela have long been allies, cooperating closely in energy and sanctions response. This event is seen by market participants as a “regime risk demonstration,” directly fueling concerns over Iran’s political stability.

Responses on Polymarket have been swift. Traders have raised the probability of Khamenei stepping down within the year from 35% to 56% in just a few days, indicating rapid updates of new information and quick market consensus adjustments.

Internal pressures are also mounting

Protests triggered by the sharp devaluation of Iran’s currency are spreading rapidly. According to the U.S. nonprofit HRANA, demonstrations have spread to 27 out of Iran’s 31 provinces and 88 cities. This not only shows the widespread nature of the protests but also reflects deep internal conflicts.

The government’s response has further heightened market expectations of escalation. Iran’s authorities accuse protesters of being incited by external forces and have increased security deployments. This defensive stance often reinforces market perceptions of “unstable authority.”

The triple pressures behind the prediction probabilities

Geopolitical level

Recently, Trump has repeatedly spoken about Iran, warning that suppressing protests could trigger a strong response. Israeli Prime Minister Netanyahu has publicly expressed support for Iranian protesters. These statements are interpreted by the market as external forces exerting ongoing pressure on Iran’s leadership, further fueling the “siege mentality” expectation.

Economic level

Currency devaluation itself signals economic out of control. When a country’s currency rapidly depreciates, it is often accompanied by rising inflation and declining purchasing power, directly affecting ordinary people’s living standards and sparking broader social discontent.

Political level

The geographic scope of protests and reports of multiple deaths indicate that the conflict has escalated from isolated incidents to a systemic political crisis. Against this backdrop, market expectations for power transfer or regime change naturally increase.

What is the prediction market saying?

Meaning of probability distribution

Interestingly, the probabilities at different time points on Polymarket show a gradual upward trend. This reflects the mainstream judgment of market participants: not expecting Iran to collapse quickly in the short term, but leaning toward a “long-term instability” outlook.

Another contract shows that the probability of Iran’s President Masoud Peshtehian stepping down within the year is about 51%, with over 60% of traders betting on “status quo.” The combination of these data points sketches the market’s true sentiment: high uncertainty, but more expectations of gradual deterioration rather than immediate collapse.

Limitations of prediction markets

It is worth noting that Polymarket has some ambiguity in defining geopolitical events. Related information mentions that the platform faced strong user dissatisfaction over disputes about the definition of the Venezuela event. This reminds us that while prediction market data is transparent, the ambiguity in settlement rules can affect its reference value.

Will Iran really “collapse”?

Analysts point out that Iran is not Venezuela. The Iranian Islamic Revolutionary Guard Corps (IRGC) has extensive regional networks and strong military capabilities in the Middle East. Speaker Ghalibaf also warned that any external action would trigger retaliation. This means that even if the political situation is turbulent, Iran’s power structure has a strong self-protection capacity.

From this perspective, the 56% probability given by Polymarket is more like a coin toss. It symbolizes that Iran’s political situation is at a highly uncertain tipping point, but does not necessarily mean an inevitable power transfer.

Summary

The prediction data on Polymarket regarding Iran reflect three key signals: first, the rapid rise of geopolitical risks; second, the market’s expectation of “long-term instability” rather than “immediate collapse”; third, the inherent ambiguity in how prediction markets handle complex political events.

As investors or observers, we can use this data as a reference, but it is more important to understand the underlying logic. The value of prediction markets lies in aggregating information and judgments from global participants, but they also have limitations—they cannot predict black swan events nor fully eliminate human irrationality. The future of Iran’s political landscape ultimately depends on how the real power struggles evolve.