Fed researchers praise Kalshi prediction markets as valuable real-time policy tool
Federal Reserve researchers published a paper praising prediction markets — focusing on Kalshi — as a valuable real-time tool for economic analysis and policy insight. The paper finds Kalshi’s forecasts for the federal funds rate and the U.S. Consumer Price Index (CPI) deliver statistically significant improvements over fed funds futures and professional forecasters, while providing continuously updated probability distributions rather than occasional point estimates. Kalshi’s markets matched the realized federal funds rate by the day of each Fed meeting since 2022, outperforming surveys and futures in that metric. Researchers highlight prediction markets’ coverage of variables lacking market-based distributions (GDP growth, core inflation, unemployment, payrolls) and note that retail participation distinguishes these platforms from institution-dominated markets. The paper suggests such markets can supply policymakers and researchers with unique, high-frequency signals that fill data gaps and improve short-term forecasting of key macro variables.
Neutral
The Fed paper is an institutional endorsement of prediction markets as research and policy tools rather than an event that directly alters crypto market fundamentals. Direct market-moving implications for cryptocurrencies are limited: the findings validate alternative data sources and may increase interest in prediction-market platforms and their tokens or related trading products, but the paper does not announce regulation, funding, or integration that would immediately affect crypto asset prices. Short-term impact: likely neutral — traders may see modest increased attention to Kalshi-like platforms and derivative products, potentially driving small flows into related services. Long-term impact: marginally positive for projects that link crypto liquidity to prediction markets or tokenize market access, as greater institutional recognition can boost legitimacy and adoption. Historical parallels: institutional or regulatory recognition of novel market tools (e.g., approval of exchange-traded products) typically produced gradual, adoption-driven uplift rather than abrupt price moves. Overall, expect information- and flow-driven micro effects for niche tokens or platforms, but no broad bullish or bearish catalyst for major crypto assets.