Do Prediction Markets Forecast Cryptocurrency Volatility? Evidence from Kalshi Macro Contracts

Do Prediction Markets Forecast Cryptocurrency Volatility? Evidence from Kalshi Macro Contracts

Do Prediction Markets Forecast Cryptocurrency Volatility? Evidence from Kalshi Macro Contracts

Section 1 – What happened?

Researchers have discovered that prediction markets, specifically Kalshi macro contracts, can forecast cryptocurrency volatility through distinct channels. The study analyzed 10 Kalshi event series and six cryptocurrency assets, including Bitcoin, Ethereum, Solana, Cardano, and Chainlink, over the period from January 2023 to March 2026. The findings suggest that Kalshi macro contracts can predict cryptocurrency volatility, with some channels performing better than others. Specifically, the monetary policy channel, measured by Fed rate repricing on KXFED contracts, was found to predict Bitcoin volatility with a t-statistic of 3.63 and a p-value of less than 0.001.

Section 2 – Background & Context

Prediction markets, such as Kalshi, have gained popularity in recent years as a means of forecasting various economic and financial outcomes. These markets allow users to bet on the likelihood of specific events occurring, providing a unique window into market expectations. The study's focus on cryptocurrency volatility is particularly relevant given the high levels of price fluctuation experienced by these assets. By examining the relationship between Kalshi macro contracts and cryptocurrency volatility, researchers aim to better understand the underlying drivers of price movements and potentially develop more effective risk management strategies.

Section 3 – Impact on Swiss SMEs & Finance

The findings of this study have implications for Swiss SMEs and finance professionals who trade or invest in cryptocurrencies. If prediction markets can accurately forecast cryptocurrency volatility, this could enable more informed investment decisions and better risk management strategies. However, the study's focus on US monetary policy and its impact on Bitcoin volatility may limit the direct applicability of the findings to the Swiss market. Nonetheless, the study's methodology and results provide valuable insights into the complex relationships between financial markets and cryptocurrency prices.

Section 4 – What to Watch

As the study's findings suggest that prediction markets can forecast cryptocurrency volatility, it is essential to monitor the performance of Kalshi macro contracts and other similar platforms. Investors and traders should also keep a close eye on the 2024-2025 rate-cutting cycle and its potential impact on cryptocurrency prices. Furthermore, the study's results highlight the need for more research into the relationships between financial markets and cryptocurrency prices, particularly in the context of the Swiss market.

Source

Original Article: Do Prediction Markets Forecast Cryptocurrency Volatility? Evidence from Kalshi Macro Contracts

Published: April 2, 2026

Author: Hardhik Mohanty

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Disclaimer: This article is for informational purposes only and does not constitute financial advice. Consult a licensed financial advisor before making investment decisions.