Impeachment Probabilities, Fed Nominations, and Market Anomalies: A Cross-Asset Analysis of Kalshi's Most Active Markets
Our analysis of the ten highest-volume prediction markets on Kalshi reveals a financial landscape dominated by two interconnected themes: profound uncertainty surrounding the political future of Donald Trump, and a remarkable market consensus on a stable, dovish monetary policy path extending well into 2026. The tension between these two narratives—one implying high volatility and the other implying profound calm—creates a complex trading environment rich with potential divergences and correlated plays. The standout data point is the 50% implied probability of President Trump leaving office before the end of 2024, a figure that demands immediate scrutiny and contextualization. This note will dissect the key markets individually and synthesize their collective implications, providing actionable insights for traders navigating this unique confluence of political and macroeconomic forecasts.
The 'Donald Trump out this year?' contract, with $9.8 million in volume and a precise 50/50 probability, is the axis around which the current prediction market universe rotates. This binary question, resolving to 'Yes' if Trump leaves office before January 1, 2026, effectively bundles several discrete risks: impeachment and conviction, resignation, or removal via the 25th Amendment. The 50% midpoint is not a forecast of inevitability but a reflection of massive uncertainty and significant two-way flow. Historically, such a probability for a sitting president would be extraordinary. The market appears to be pricing in a scenario where the 2024 election is either exceptionally close with contested results, or where non-electoral removal mechanisms gain unforeseen traction. The high volume suggests institutional or high-net-worth participation, not mere retail speculation. For traders, this market acts as a volatility index for U.S. political risk. A sustained break above 60% would likely trigger repricing in all Trump-adjacent markets (Fed Chair, fiscal policy). A decline below 40% would signal the market is discounting near-term removal risks and focusing on the electoral calendar. Key immediate catalysts include Supreme Court rulings on immunity and ballot access, the timing and political impact of criminal trials, and the candidate's health. This market's probability directly feeds into the next most significant contract.
Trading at a 38% probability with $5.0 million in volume, the 'Kevin Hassett as Fed Chair' market is a direct derivative of the Trump presidency market. It offers a more nuanced, conditional bet: If Trump is president, then what are the odds he nominates his former Council of Economic Advisers chair to lead the Federal Reserve? The 38% level indicates Hassett is considered a frontrunner among a field of potential candidates (e.g., Judy Shelton, John Allison, or a reappointment of Jerome Powell if his term is extended). Hassett's perceived dovishness and established relationship with Trump are likely priced in. This market has a non-linear relationship with the 'Trump out' market. A rise in the probability of Trump's exit would depress Hassett's chances disproportionately. Conversely, confidence in Trump's tenure, combined with signals from his campaign, could push this probability toward 50% or higher. It is crucial to monitor the 'Powell leaves before 2026?' market, which is priced at a near-zero 1% probability. This implies the market believes Powell will serve his full term ending in May 2026. Therefore, a Hassett nomination would logically occur after that date, or in the unlikely event Powell resigns early. Traders should construct combinatorial positions: selling Hassett probability (i.e., betting 'No') while buying a modest probability of Trump's exit could be a hedge against political upheaval.
In stark contrast to the political volatility, the cluster of Federal Reserve and macroeconomic markets paints a picture of serene stability. The 96% probability of a 0bps hike in January 2026 is a breathtaking forecast of policy inertia over a 22-month horizon. Coupled with only a 6% chance of two rate cuts and a mere 2% probability of a 2025 recession, the market narrative is unequivocally a 'soft landing.' This represents an extremely consensus view. The risk here is asymmetry. While the probabilities of hikes, multiple cuts, or recession are low, the volume in these markets is high ($4.6M to $6.4M), meaning a shift in fundamental data would cause large moves in these thinly-traded probability tails. For instance, a single hot CPI report might not move the 96% hold probability much, but it could triple or quadruple the probability of a hike (e.g., from 2% to 8%), offering significant returns for tail-risk buyers. Traders should consider selling the overpriced stability—for example, writing contracts that benefit from the 96% hold—and using the premium to purchase cheap out-of-the-money options on rate hikes or recession, creating a positive carry trade that pays off in a volatility event.
The extreme skepticism in the Bitcoin markets ($130k+ and $150k+ both at 1%) is a significant divergence from sentiment in broader crypto circles. This suggests Kalshi's user base is applying a stringent discount to the 'hyper-bitcoinization' and ETF-driven price surge narratives. The high volumes indicate this is a deliberate, heavily traded view, not an illiquid anomaly. For crypto-native traders, this may represent a relative value opportunity: if their fundamental or on-chain analysis suggests higher odds, they can 'buy' these low-probability contracts. For macro traders, these markets can serve as a sentiment gauge. A rise in these probabilities above 5% would likely correlate with risk-on movements in equities and a weaker dollar, potentially offering cross-market signals. The key catalysts are Bitcoin ETF net inflows, regulatory developments, and halving-related supply shocks due in April 2024. Monitoring the gradient between the $130k and $150k contracts can also provide insight into the steepness of the market's implied volatility smile for Bitcoin.
The high-volume sports contracts, while not our primary geopolitical focus, complete the landscape. Their healthy volumes and non-extreme probabilities (10% for Philadelphia, 14% for Los Angeles R) suggest a well-functioning, liquid platform for event derivatives. For our purposes, they act as a bellwether for overall platform liquidity and can be used to gauge whether probability shifts in political markets are specific or part of a broader platform-wide sentiment swing.
The central trade structuring opportunity lies in the tension between the high political volatility priced into the Trump exit market and the profound monetary policy stability priced into the Fed markets. One actionable cross-market strategy is a 'Political Volatility Hedge':
The Bitcoin markets offer a pure divergence play for those with a strong crypto view. The key risk factor for the entire complex is a catalyst that simultaneously challenges political stability and the economic soft landing—for example, a geopolitical shock that spikes inflation and destabilizes the administration. In this scenario, the currently cheap tails in both political and rate markets would pay off together. Continuous monitoring should focus on the political-legal calendar, CPI prints, employment data, and Bitcoin ETF flow reports. The 50% probability on Trump is not a static forecast; it is a standing invitation for recalibration based on incoming information. Traders must decide if they believe the market is overestimating political risk or underestimating economic risk, and position accordingly in these highly liquid, interconnected prediction markets.
Current Probability: 50.0%
The 'Donald Trump out this year?' market at a 50% probability is the single most striking and consequential datum. Given that a presidential election is scheduled for November 2024 and the term extends to January 2025, a 50% implied probability before the end of 2024 is exceptionally high. Historical context is vital: no US president has been removed via impeachment and conviction. The high volume ($9.8M) indicates this is not a fringe bet but a major market focus. The 50% level suggests the market is not pricing a single clear catalyst (e.g., a guaranteed impeachment vote) but is instead assigning significant weight to a basket of tail risks: resignation due to health or scandal, incapacitation under the 25th Amendment, or a successful impeachment conviction. This probability likely incorporates a substantial 'Trump Risk Premium' that affects all correlated markets, including the Hassett Fed Chair market. For traders, this is a high-volatility binary option. The key catalyst watch is the political calendar and any developments from ongoing legal proceedings. A move above 60% would signal a major shift in perceived political stability, while a drop below 40% might indicate the market is dismissing near-term removal scenarios.
Current Probability: 38.0%
Directly linked to the Trump market, the 'Will Trump next nominate Kevin Hassett as Fed Chair?' at 38% is the second-most analytically rich contract. Kevin Hassett, former Trump CEA chair, is a known quantity with dovish leanings. A 38% probability, backed by $5M in volume, implies the market sees him as a leading contender IF Trump wins re-election. This is not a prediction of a Trump win per se, but a conditional forecast about his personnel choices. The probability seems elevated compared to a typical 'field of potential candidates' market. It likely reflects specific insider reporting or analytical consensus. For traders, this offers a cleaner play on Trump administrative policy than the binary 'out' question. Correlations are key: a rise in the 'Trump out' probability should depress Hassett's chances, as a different president would have different nominees. Conversely, a drop in 'Trump out' probability, coupled with strong Trump polling, could lift the Hassett contract. The key catalyst is any official statement from Trump or his team regarding Fed preferences. Risk factors include other candidates (Judy Shelton, John Allison, etc.) gaining traction.
Current Probability: 96.0%
The monetary policy cluster presents a coherent but ultra-calm narrative. The 96% probability of a 0bps hike in Jan 2026 suggests the market views the current tightening cycle as definitively over and sees a holding pattern for nearly two years—a remarkable forecast of stability. The 6% probability of two rate cuts (totaling 50bps) and the 2% probability of a 2025 recession are mutually reinforcing; they paint a picture of a successful soft landing with minimal further easing. This represents a highly consensus 'goldilocks' view. The 'Powell leaves before 2026?' market at 1% adds another layer, suggesting near-certainty of Powell serving his full term (ending May 2026). This contradicts the Hassett market unless the market is implicitly assuming a post-Powell nomination by Trump in 2026. For traders, these low-volatility probabilities create asymmetric payoff opportunities. Any sign of resurgent inflation, labor market weakening, or a Fed leadership shake-up would cause dramatic probability shifts in these low-probability, high-volume markets. Selling the 96% hold (i.e., buying low-probability hike/cut contracts) as a hedge against volatility spikes could be a strategic play.
Current Probability: 1.0%
The two Bitcoin markets ($130k+ and $150k+ at 1% each) are outliers of skepticism amidst a crypto market that often trades on hyperbolic narratives. With substantial volumes ($9.7M and $4.6M), these are significant bets against a major bull run in 2024. This stands in stark contrast to sentiment on platforms like Polymarket, where similar contracts often trade at higher probabilities, and to the bullish forecasts of many crypto analysts. This could indicate that Kalshi's participant base is more macro/traditional finance-oriented and is applying a harsh discount to crypto optimism. It may also reflect the timing of contract creation post-ETF approval, when 'buy the rumor, sell the news' dynamics prevailed. For traders, this presents a potential divergence play. If on-chain metrics, ETF inflows, or macro conditions (like potential Fed cuts) improve, these 1% probabilities could expand rapidly. Monitoring flows into spot Bitcoin ETFs and the term structure of futures premiums will be key leading indicators for these contracts.
Current Probability: 10.0%
The Pro Football Championship markets, while seemingly non-geopolitical, offer insight into market efficiency and sentiment. Philadelphia at 10% and Los Angeles R at 14% are plausible, mid-range probabilities for an event in early 2026. The significant volume ($5.6M and $4.2M) indicates robust interest. For a research desk, these can serve as a control group—markets less affected by geopolitical shocks. Dramatic moves in these contracts unrelated to player news could signal broader platform-specific liquidity or sentiment shifts. They are not a primary focus for geopolitical analysis but are notable for their sheer trading activity.