If I invest in technology (hoping it will work) but use the prediction market to hedge in case the technology won't work, how does that tell anyone watching the prediction market that people have net positive feelings about the technology?

If you were 100% confident you wouldn’t hedge at all. If you’re 80% confident you’d hedge less than if you were only 60% confident.

This all translates into an price signal if the market is functioning and liquid.

You should explain how this works then. How exactly do you derive a prediction from the price? Also if the people with deep knowledge of the technology use the prediction market for hedging, and all the "outsiders" use it for speculation, then the signal is disturbed anyway.