Geopolitical & Macroeconomic Intelligence Brief: Prediction Market Analysis – Trump Exit, Fed Policy, & Digital Asset Outlook

Key Takeaways

• A 50% probability of President Trump exiting office before 2026 is the dominant market signal, indicating severe perceived political risk.
• Federal Reserve leadership is expected to remain stable (1% Powell exit probability), but a Hassett nomination is the conditional favorite (38%) should a vacancy arise.
• Monetary policy expectations are moderately dovish, with a 94% probability against two 50-bps cuts in 2025.
• Bitcoin markets suggest an 80% chance of a drop below $80,000, with a mere 11% chance of reaching $100,000 by year-end, favoring a volatile, range-bound thesis.
• Cross-market analysis suggests political volatility is decoupled from expectations of institutional policy stability, creating complex hedging dynamics.

Executive Summary

Current prediction market activity across Kalshi’s geopolitical, macroeconomic, and financial contracts presents a coherent, if volatile, narrative for the 2025-2026 timeline. The standout signal is a 50% implied probability of a Donald Trump presidency ending before January 2026, indicating markets perceive unprecedented near-term political instability. In contrast, Federal Reserve leadership is expected to remain stable, with minimal probability assigned to Chair Powell’s departure and a high 38% probability for a Kevin Hassett nomination should a vacancy occur. Monetary policy expectations are dovish, with markets heavily discounting aggressive rate cuts. Meanwhile, cryptocurrency markets, particularly Bitcoin, exhibit a cautiously bullish but highly bifurcated outlook, with modest probabilities assigned to extreme price movements. Volume concentration suggests traders are most focused on political succession risk and Bitcoin's price trajectory.

1. The Trump Exit Premium: Unpacking the 50% Probability

The market 'Donald Trump out this year?' trading at a 50.0% probability with $9.8M in volume is the single most significant and alarming datapoint in our analysis. This implies a literal coin-flip chance that the 47th president does not complete his first year in office.

Historical Context & Market Mechanics: Historically, prediction markets on political exits have only reached such elevated levels during acute crises (e.g., UK Prime Minister betting during partygate, or Trump's first impeachment). A 50% probability on a binary event of this magnitude is extraordinarily high for an incumbent US president, suggesting the market is pricing in a non-trivial risk of resignation, removal via the 25th Amendment, or impeachment and conviction. The volume – the highest among all markets listed – confirms intense institutional and sophisticated retail interest.

Actionable Insights & Catalysts:

• Trading the Spread: The 50% midpoint is inherently unstable. Traders should monitor for catalysts that push probability decisively above 60% or below 40%. A move above 60% would signal a perceived crisis cascade; a drop below 40% suggests stabilizing political narratives.
• Key Catalysts to Watch:
  1. Cabinet & Staffing Stability: Early resignations of key cabinet officials (e.g., Attorney General, Chief of Staff) would be a strong positive signal for the 'Yes' outcome.
  2. Legislative Momentum: A failure to pass key agenda items, coupled with rising public disapproval, could increase pressure.
  3. Health Disclosures: Any ambiguity regarding the president's health would be immediately reflected here.
  4. Legal Developments: Accelerated timelines in remaining criminal cases or new congressional investigations.
• Risk Factors: The market may be overestimating the feasibility of removal. The 25th Amendment is a high bar, and impeachment conviction requires 67 Senate votes. This structural inertia suggests the 50% probability might embed a high risk premium rather than a pure probabilistic forecast. A contrarian 'No' position could be justified based on constitutional stability.

2. Federal Reserve Outlook: Leadership Stability vs. Dovish Policy

Markets depict a Federal Reserve in leadership stasis but poised for policy easing.

Leadership (Powell & Succession): The 'Powell leaves before 2026?' market at a mere 1.0% probability ($6.4M volume) reflects overwhelming confidence in Jerome Powell serving his full term until early 2026. This creates a fascinating juxtaposition with the Trump exit market, separating political volatility from perceived central bank independence—at least for now.

The linked market, 'Will Trump next nominate Kevin Hassett as Fed Chair?' at 38.0% ($5.0M volume), is critical. It acts as a conditional bet: if a Fed Chair vacancy occurs before Jan 2029, Hassett is the clear front-runner. Hassett, a former Trump economic advisor, is viewed as a politically aligned, non-traditional candidate. The 38% level suggests he is the most likely single nominee, but the market acknowledges significant uncertainty, with other candidates collectively assigned a 62% chance.

Monetary Policy ('The Dot Plot' in Market Form): The 'Will the Fed cut rates 2 times?' market, pricing only a 6.0% chance of two 50-bps cuts (implying 100 bps of easing), is revealing. This indicates that while markets expect cuts (likely 1-2 standard 25-bps cuts), they heavily discount an aggressive, recession-forcing easing cycle in 2025. This aligns with a 'soft landing' narrative where the Fed calibrates cuts cautiously.

Actionable Insights:

• Arbitrage Opportunity: The low probability of Powell's exit (1%) versus the high conditional probability of a Hassett nomination (38%) creates a synthetic bet on Trump's influence. A trader believing in Trump's political durability might buy the 'Powell leaves' contract and hedge with a sell of 'Hassett nominated,' banking on a vacancy increasing the likelihood of a Trump-aligned pick.
• Policy Positioning: The muted expectations for deep cuts suggest treasury curve trades favoring a bear flattener (short long-dated bonds) if economic data remains resilient. A surge in this probability above 15% would signal a rapid deterioration in the economic outlook.

3. Digital Assets: Asymmetric Bets on a Maturing Market

Bitcoin dominates the financial speculation landscape, with multiple high-volume markets outlining a nuanced and volatile forecast.

The Central Case: The most concrete contract, 'Will Bitcoin be above $100,000 by Dec 31, 2025?' at 11.0% probability ($5.8M volume), establishes a baseline. Markets see a roughly 1-in-9 chance of a year-end breakout to that symbolic level.

The Volatility Skew – 'How High' vs. 'How Low': The suite of 'How high' and 'How low' markets reveals the asymmetric risk profile traders are pricing:

• Upside Tail: Probabilities for extreme highs are minimal but non-zero: $130,000+ (1.0%), $150,000+ (1.0%). This prices in low-probability, high-impact bullish catalysts (e.g., dramatic ETF inflows, hyperinflation fears).
• Downside Buffer: The 'How low will Bitcoin get this year? ($80,000.01 or above)' at 20.0% is highly informative. It suggests an 80% chance Bitcoin trades below $80,000 at some point in the year. This is a sobering assessment of near-term volatility, anchoring a likely trading range with a significant dip expected.
• Ehereum Underperformance: Ethereum's $5,000+ target is given a 2.0% probability, double that of Bitcoin's $130,000+ bet but on a lower nominal hurdle. This may reflect a view of ETH as a higher-beta, lower-consensus asset within the crypto complex.

Actionable Insights:

• Range-Bound Strategy: The high probability (80%) of a move below $80,000 suggests selling volatility or structuring range-bound options strategies (e.g., iron condors) around a $70,000-$100,000 range could be profitable.
• Tail Risk Hedging: The 1% cheap bets on $150,000+ can be viewed as lottery tickets or, for institutional holders, cheap upside hedge collars. A rise in these probabilities above 2.5% would signal a major shift in bullish sentiment.
• Catalysts: Key drivers include quarterly ETF flow reports, regulatory clarity (or adversity) from the SEC, and macro liquidity conditions influenced by the Fed. A break above $100,000 would likely cause a rapid repricing of all 'how high' contracts.

4. The Anomaly: Philadelphia Eagles 2026 Super Bowl

The 'Philadelphia win the 2026 Pro Football Championship' market at 10.0% probability ($5.6M volume) is an outlier in this set. This probability likely reflects early season modeling based on roster strength and is not geopolitically significant. Its high volume indicates robust sports betting liquidity on Kalshi but should be analyzed separately from macro trends.

5. Synthesis & Cross-Market Implications

Connecting these markets reveals a complex, interconnected landscape:

1. Political Risk is the Dominant Theme: The Trump exit probability is the sun around which other markets orbit. A resolution to 'Yes' would trigger seismic repricing across all Trump-contingent markets, notably sending the Hassett Fed Chair probability soaring towards 80%+ and potentially introducing volatility into rate cut expectations.

2. Macro-Crypto Linkage is Muted: The Fed's dovish but unaggressive path priced in (6% for 100bps cuts) does not support a 'moon shot' crypto narrative driven purely by liquidity. The crypto markets' own dynamics (adoption, regulation) appear more dominant in 2025 pricing.

3. Stability of the Administrative State: The stark contrast between the 50% presidential exit risk and the 1% Fed Chair exit risk suggests markets believe the civil service and independent agencies may act as buffers against top-level political volatility, at least in the short term.

Portfolio Implications:

• For Macro Hedge Funds: Long volatility on political event risk (via prediction markets or related equity volatility products) appears warranted. Shorting the USD on rallies could be a hedge against political instability.
• For Crypto Funds: Position for volatility rather than unidirectional bullishness. Use the high probability of a sub-$80k print to layer in strategic long entries.
• For Fixed Income Managers: The low expectation for aggressive Fed cuts suggests being wary of the long end of the curve; focus on the front end for carry, with conditional strategies tied to political risk escalations that could force the Fed's hand.

6. Key Risk Factors & Conclusion

Risks to Our Interpretation:

• Prediction Market Limitations: Liquidity, while high, is concentrated. These are sentiment indicators, not omniscient forecasts.
• Black Swan Events: The models embedded in these prices cannot account for unknown-unknowns (health events, geopolitical shocks outside the US).
• Reflexivity: The high-profile 50% Trump exit probability could itself become a political catalyst, influencing public and elite perceptions.

Conclusion: Prediction markets are flashing a clear warning on political stability in the United States, assigning a historically high probability to a premature presidential departure. This overrides all other signals. In its shadow, the Federal Reserve is expected to be an island of stability, guiding a gentle monetary easing cycle. Digital asset markets, meanwhile, are pricing a path of volatile consolidation with explosive but low-probability upside. The actionable trade is to use the relative stability priced into institutions like the Fed and the enduring range-bound expectations for crypto to hedge against the acute, binary political risk that currently defines the landscape. Monitoring the 'Trump out' probability should be the paramount task for all macro traders; its movement will be the leading indicator for regime change across multiple asset classes.

Market Analysis

Donald Trump out this year? 📈

Current Probability: 50.0%

The most critical and liquid market. Probability indicates market sees a coin-flip chance of an unprecedented early exit. Volume confirms high conviction trading.