Analysis of high-volume political & technology prediction markets: Elevated 2025 exit risk for Trump, Fed Chair speculation, and stable macro outlook
Markets show heightened political instability, with a 50% probability assigned to Donald Trump leaving office in 2025. This anchors much of the current volatility across policy-related contracts. Meanwhile, the appointment of Kevin Hassett as Fed Chair holds a 38% likelihood, reflecting a significant premium on his candidacy amid broader Trump administrative uncertainty. Counterintuitively, recession risk for 2025 is priced at only 2%, suggesting markets remain confident in economic resilience despite political noise. Bitcoin speculation is heavily skewed towards extreme bullish outcomes, with $130K and $150K targets each priced at 1%—low probability but high-volume bets indicating speculative fervor. Key catalysts include Trump's legal/personal health developments, July 2025 Fed leadership decisions, and Q2/Q3 2025 GDP prints.
The most significant signal from our dataset is the 50% probability on 'Donald Trump out this year?' ($9.8M volume). For a sitting president, this is an extraordinarily high implied risk of removal within a single calendar year. Historical context is stark: no president has been removed from office via impeachment or resignation in their first year of a term. The market is therefore pricing in a uniquely volatile scenario, likely driven by a combination of factors: ongoing legal challenges (potentially reaching critical junctures), the 25th Amendment discourse, or resignation due to external pressure. The 50% level suggests near-perfect market uncertainty, creating binary volatility. Actionable Insight: Traders should monitor this contract as a volatility hedge for all other Trump-administration policies. A move above 60% would signal institutional belief in imminent, high-impact political disruption. Conversely, a drop below 40% would indicate stabilization. The $9.8M volume confirms this is the central narrative for 2025.
Flowing from this, the 'Will Trump next nominate Kevin Hassett as Fed Chair?' contract at 38% ($5.0M volume) is a direct derivative. Jerome Powell's term as Chair expires in May 2026, but given Trump's known preference for dovish, loyal appointees, speculation on an early replacement is active. Hassett, former CEA Chair under Trump, is a known quantity with aligned views. The 38% probability is meaningfully elevated above any other potential candidate (though not explicitly traded here). The closely related 'Powell leaves before 2026?' market at only 1% ($6.4M volume) creates a fascinating divergence. It suggests that while Powell is overwhelmingly expected to serve his full term as Governor, the Chair role may be reassigned. This is a critical nuance for Fed watchers. Actionable Insight: This pair of contracts allows for a basis trade. If the 'Hassett nomination' probability rises while 'Powell leaves' remains anchored near 1%, it implies a scenario where Powell is demoted within the Board—a historically rare but not impossible event.
Despite the political turbulence priced above, traditional macroeconomic risk is priced as exceptionally low. The 'Will there be a recession in 2025?' contract stands at 2% ($4.6M volume). This is near the lower bound of historical recession probabilities outside of acute crises. It reflects consensus that consumer strength, labor market resilience, and contained inflation will persist. The 'Will the Fed cut rates 2 times?' (50 bps) market at 6% ($4.6M volume) corroborates this; it indicates minimal expectation for aggressive easing due to economic weakness. The Fed is seen as on hold, or cutting modestly for technical reasons (e.g., to normalize from restrictive levels), not to fight a downturn. Key Risk Factor: The stark disconnect between political chaos (50% Trump exit) and economic calm (2% recession) is unusual. Typically, severe political instability triggers economic fear. This divergence may present a mispricing opportunity. If Trump exit probabilities spike, recession fears would likely belatedly rise, making the current 2% level a potential short for hedge funds. Catalyst: Q2 2025 GDP advance estimate (late July).
Two high-volume contracts on Bitcoin's 2025 price peak show identical 1% probabilities but different targets: $130K+ ($9.7M volume) and $150K+ ($4.6M volume). The volume disparity suggests more interest in the $130K threshold. These are pure lottery-style contracts, reflecting retail and speculative capital betting on a parabolic, ETF-driven super-cycle. The 1% probability is not trivial—it implies a 1-in-100 chance of these levels being reached in 2025. Given Bitcoin's historical volatility, this may be under-priced for tail events. Historical Context: In November 2020, similar long-tail contracts on Bitcoin reaching $100K by end-2021 traded at sub-5% probabilities before the bull run accelerated. Actionable Insight: These contracts are cheap volatility and convexity plays. For traders with a strong bullish thesis, buying this 1% probability offers massive leverage (100:1 payout if correct). However, they are binary and likely to expire worthless. A more nuanced approach is to use these as sentiment gauges; rising probabilities (e.g., from 1% to 5%) would signal accelerating bullish momentum before spot prices fully react.
The 'Department of Education eliminated before Jan 1, 2026?' at 1% ($3.9M volume) is a pure policy speculation. While the Trump agenda may include dismantling the DOE, the market sees almost no chance of legislative success within 2025, even with a Republican Congress. This 1% is a pricing of non-zero executive action risk. Sports markets for the 2026 Pro Football Championship show the Philadelphia at 10% ($5.6M volume) and Los Angeles R at 14% ($4.2M volume). These are efficient, high-volume sportsbooks providing a useful contrast: they demonstrate how prediction markets handle high-information, non-political events (probabilities align closely with oddsmaker lines). The lower volumes versus the Trump contract highlight where speculative capital is truly concentrated.
Critical Catalysts for H2 2025:
Trading Strategies:
The prediction markets paint a picture of a bifurcated 2025: high political risk concentrated in the persona of Donald Trump, but low perceived systemic economic risk. The 50% probability of a presidential exit is the dominant market narrative, overshadowing even major policy changes. The primary risk to traders is narrative contagion: a rapid repricing of the Trump exit probability could cause non-linear moves in all correlated contracts (Fed Chair, Education Dept, etc.), potentially overwhelming hedging models. A secondary risk is liquidity illusion: high volume in the Bitcoin tail contracts may not provide efficient exit liquidity if the market moves rapidly. Finally, the regulatory risk for prediction markets themselves remains an ever-present overhang that could impact all contract valuations.
Bottom Line: Focus on the Trump exit probability as your North Star. All other political and policy markets are, for now, satellites orbiting this central binary event. Macro contracts remain oddly complacent and may offer the best relative value shorts if political volatility escalates beyond current expectations.
Current Probability: 50.0%
Extremely elevated for a sitting president. A market in perfect indecision, acting as a volatility pump for all related policies.
Current Probability: 38.0%
High probability for a specific personnel outcome. Reflects market belief in Trump's preference for a loyalist dovish chair.
Current Probability: 2.0%
Priced for near-perfect economic soft landing. Significant divergence from political risk signals potential mispricing.
Current Probability: 1.0%
Low-probability, high-convexity tail bet. High volume indicates strong retail/speculative interest in extreme outcomes.