Bitwise and GraniteShares Launch Prediction Market ETFs Amid Growing Interest
By John Nada·Feb 18, 2026·4 min read
Bitwise and GraniteShares are launching prediction market-style ETFs linked to U.S. elections, reflecting growing interest in political event-based investing.
Exchange-traded fund issuers Bitwise and GraniteShares have taken a significant step by filing with the US Securities and Exchange Commission to introduce funds linked to event contracts based on the outcomes of US elections. Bitwise has proposed a new series of ETFs branded PredictionShares, consisting of six prediction-market-style ETFs that will be listed on NYSE Arca. The first two funds are designed to pay out based on whether a Democrat or Republican wins the U.S. presidential election in November 2028, while the next two target control of the Senate and the final two are focused on the House of Representatives.
Each fund aims to provide capital appreciation to investors contingent on the electoral success of the Democratic Party or the Republican Party, depending on the fund's structure. According to the prospectus, at least 80% of each fund's net assets will be allocated to binary event contracts, which are political prediction market derivatives traded on regulated exchanges. These contracts settle at $1 if the specified outcome occurs and at $0 if it does not, meaning the funds could lose substantial value if the anticipated political outcome does not materialize.
GraniteShares has also filed a similar prospectus on the same day, proposing six funds structured identically to those of Bitwise, reflecting the growing trend of financial instruments based on political events. This dual filing on the same day underscores a burgeoning interest among investors and financial institutions in the intersection of politics and finance. James Seyffart, an ETF analyst at Bloomberg, noted that this move represents an ongoing trend of financializing various aspects of the market, suggesting that the appetite for such investing vehicles is on the rise.
The entry of these ETFs into the market underscores a notable shift in how investors can engage with political outcomes, allowing for a more systematic approach to betting on elections. This could attract a diverse range of investors, from those looking to engage in speculative trading to others who wish to hedge their portfolios against political uncertainty. Importantly, the popularity and potential profitability of prediction markets may drive further institutional interest and innovation within the ETF landscape.
In essence, Bitwise is offering separate ETFs for each race — one for each party — and investors can choose which one to invest in. The price of each fund’s shares on any given day reflects the market’s implied probability of that outcome, fluctuating between $0 and $1 based on polling, news, and sentiment. This dynamic pricing mechanism stands in contrast to traditional equity investments, where price movements are influenced by company performance and broader economic indicators. Such a model could democratize access to political betting and attract retail investors who may have previously shied away from more complex financial instruments.
The structure of these prediction market ETFs raises intriguing questions about the broader implications for the investment community. As the landscape of financial products evolves, the implications of these prediction market ETFs could extend beyond mere speculation on election outcomes. They may signal a broader acceptance of alternative investment strategies that incorporate political risk into financial planning. This trend could lead to the emergence of new financial products designed to capture market sentiment surrounding other socio-political events.
However, the introduction of these funds is not without its challenges. Regulatory scrutiny is likely to increase as the line between traditional investment vehicles and speculative instruments continues to blur. Investors and regulators alike will need to navigate the complexities of these new financial products to ensure market integrity and investor protections. The introduction of such ETFs could also lead to increased volatility surrounding election-related trading activities, as investors react not only to electoral outcomes but also to the myriad factors that can influence public sentiment leading up to elections.
As more firms enter this space, it raises questions about market integrity, investor protections, and the potential for increased volatility surrounding election-related trading activities. The regulatory environment will play a crucial role in determining how these products are structured and marketed, as well as how they fit into the broader financial landscape.
The launch of these prediction market ETFs could catalyze a deeper exploration of how political events influence market dynamics. Investors will be closely monitoring not just the electoral results but also the evolving regulatory environment surrounding such financial products. The potential for these ETFs to attract a new class of investors interested in political events will be an important development to watch in the coming years. As the industry adapts to incorporate these new instruments, the implications for both retail and institutional investors could be profound, reshaping how political risk is perceived and managed within investment portfolios.