Implied probability

Implied probability turns a price into the likelihood the market assigns to an event. On prediction markets such as Polymarket or Kalshi, each contract pays $1 if the outcome happens and nothing if it does not, so a contract trading at 30 cents implies about a 30% chance. With decimal betting odds the formula is one divided by the odds: odds of 4.0 imply 25%. Options markets produce implied probabilities too, derived from the prices of calls and puts at different strikes.

In crypto the figure is quoted to summarize what traders expect: the chance that bitcoin touches a given price before the end of the year, that an ETF is approved or that a network upgrade ships on time. Because traders back their views with money, these prices often react to news faster than surveys or analyst targets.

An implied probability is not a guarantee. Fees, the bid-ask spread and the operator's margin usually push the probabilities of all outcomes above 100% in total, a thin market can be moved by one large order, and the contract rules decide exactly what counts as a win. An outcome priced at 5% still happens about one time in twenty.