Fed: Kalshi Superior in Macro Forecasts, Impact on BTC

Fed Researchers Recommend Kalshi

Three researchers from the US Federal Reserve argue that the prediction market Kalshi measures real-time macroeconomic expectations more effectively than current surveys and market-based forecasts, advocating for the platform's inclusion in the Fed's decision-making process. The study titled “Kalshi and the Rise of Macro Markets” was published on February 12 by Federal Reserve Board chief economist Anthony Diercks, research assistant Jared Dean Katz, and Johns Hopkins researcher Jonathan Wright. The researchers emphasize that Kalshi provides high-frequency, continuously updated probability distributions tied to macroeconomic outcomes such as the Fed's interest rate decisions, consumer price index, employment data, GDP growth, and gasoline prices. They suggest using Kalshi data to create risk-neutral probability density functions, as current benchmarks lag behind monetary policy interest rate decisions.

Kalshi and BTC Macro Expectations

Kalshi is noted to be more reactive than traditional tools; for example, the probability of a July rate cut rose to 25% after statements from Fed officials and fell with strong employment data. These data play a critical role in BTC detailed analysis, as macro expectations directly affect BTC prices. Fed research papers are only preliminary studies that stimulate discussion and do not influence the bank's decisions.

Prediction Markets on the Rise in Crypto

Prediction markets, with platforms like Kalshi and competitor Polymarket, have gained popularity in the crypto space, reaching a monthly trading volume exceeding 10 billion dollars. This volume feeds the BTC futures market and provides superior data to investors for BTC spot analysis. Kalshi's integration with the Fed could reduce BTC volatility.