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GM. This is Milk Road, the crypto newsletter that's teaming up with Kalshi to interrupt your regularly scheduled βSpicy Take Sundayβ edition to ask you a weird questionβ¦ |
You read this newsletter every afternoon, right? |
You've got takes. Probably strong ones. |
You've watched the Strategic Bitcoin Reserve drag on as a βconcept of a planβ for more than a year, you've got a gut feeling on whether another country quietly puts BTC on its balance sheet before Christmas, and you've probably got a view on whether Kraken finally goes public in 2026. |
So where, exactly, do those takes go? |
You can tweet them into the void⦠|
You can argue with your buddy in the group chat⦠|
Or you can try to express them by buying a stock. |
But thatβs a clumsy way to bet on a specific event - because stocks move on 50 other things at the same time. |
Until pretty recently, that was kind of it. Opinions had no proper marketplace. |
But thatβs changing - fast. π |
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And today we're teaming up with Kalshi to talk about why. |
Here's what we're gonna cover: |
Why prediction markets might be crypto's first real product-market fit in years. What you can actually bet on (it's weirder and broader than you'd think). How you (a Milk Road reader) can have a genuine edge on this stuff.
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Alright. Let's get into it. |
CRYPTO'S TWO-PRODUCT PROBLEM |
Be honest with yourself for a second⦠|
Crypto has been around for 15+ years - and in all that time, how many things has the industry produced that people outside of crypto actually use? |
I count two: |
1. Trading: people want to speculate, and crypto gives them a 24/7 casino with assets/access nobody else offers. |
2. Stablecoins: people want dollars without the bank, and stablecoins do that better than anything else on the planet - with the growth to back that theory up⦠|
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Sure, NFTs had a moment⦠but then most of them went to zero. |
The metaverse was supposed to be the next iPhone⦠instead we got empty digital real estate that nobody visits. |
And play-to-earn games? They turned out to be play-to-earn-a-bunch-of-worthless-tokens more than anything else. |
So when something new pops up that actually pulls in people from outside of crypto - it pings on our radar⦠|
And right now, Iβm starting to think prediction markets are bringing crypto its third product-market-fit (PMF) moment. |
WHAT YOU CAN ACTUALLY BET ON |
ICYMI: Prediction markets are a marketplace for outcomes. |
You buy YES or NO shares on whether something will happen. If you're right, each share pays out $1. If you're wrong, $0 (and you can sell anywhere in between). |
Point is: the price reflects the crowd's best guess at the probability. |
And the genius part of it all is what you can trade. |
Stocks let you bet on companies. Crypto lets you bet on coins. |
Prediction markets let you bet on basically anything with a clear answer: |
Will the Fed cut rates in June? Will it rain in NYC on Saturday? Will the Lakers make the playoffs? Will [Company X] acquire [Company Y]? Will a specific bill pass Congress this year? Will OpenAI release GPT-6 before the end of 2026?
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Theyβre the kinds of things you might have opinions about - but until prediction markets, you had no clean way to express those opinions financially. |
Because stocks and crypto are noisy! They might move on a mix of earnings, macro, and sentiment - all at once. |
A prediction market just asks: what's the probability? Then it lets you trade on it. |
CASE STUDY: THE GAMESTOP / EBAY SOAP OPERA |
Here's how this looks in real life. |
A couple weeks ago, GameStop CEO Ryan Cohen made a $56B bid for eBay. A $12B company bidding for a $46B company, with the offer of βhalf cash, half stockβ... |
The math was as ambitious as it was meme-able: |
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Watch how the prediction market handled it in real time: |
Day 1 (bid announced): Kalshi traders pegged the deal at ~25% odds at its peak. Day 2: Cohen flubbed some financing questions on CNBC, Michael Burry (yes, that Burry) sold his entire GameStop position following, odds dropped from ~36% to ~16%. May 12: eBay's board officially rejected the bid. Odds slid as low as ~14%.
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Now compare that to what the stock did - and remember: volatility is where the opportunity lies⦠|
Over the same 10 day period, GME moved down ~16% top to bottom. |
You could have bought βNOβ on Kalshi at 9am on the 5th of May, and sold it by 1pm the same day to make more than a 50% return. |
Thatβs more than 3x the return you would have gotten over a 10 day period shorting the stock (all in a matter of hours). |
And opportunities like this exist on prediction markets because (again), they remove the noise and focus on a single outcome. |
THIS AINβT A NICHE PRODUCT ANYMORE |
Something is genuinely shifting here - and the data backs it up: |
Kalshi just raised $1B at a $22B valuation. Their weekly notional volume recently hit a record $4.1B. Institutional trading volume is up 800% in six months. Annualized volume is somewhere around $178B.
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And critically⦠|
Kalshi is CFTC-regulated - meaning it's the first U.S. prediction market that big institutions can legally use. |
That's the big unlock for them. |
Polymarket has been around longer, but most U.S. firms can't touch it. |
Kalshi clears that hurdle. |
HEREβS WHERE YOU COME IN |
Whatβs one of the longest-running crypto news stories of the past 12-18 months? |
One that comes to mind for me is the Strategic Bitcoin Reserve. |
The question of whether the U.S. government formally creates a national BTC stockpile, Γ la the Strategic Petroleum Reserve. |
If you read Milk Road, you've likely been following this with us for over a year now⦠|
You saw the Trump campaign pledge in summer 2024β¦ |
You watched the odds rip to 69% in January 2025 on the inauguration hype (then crater into the single digits as the year went on and nothing happened)β¦ |
You saw Senator Lummis' BITCOIN Act proposing 1M BTC over five years⦠|
You watched executive orders get drafted, leaked, walked back⦠|
Now ask yourself: how would you have traded that view? |
You could've bought BTC. But BTC moves on a hundred other things. |
(Cycles, ETF flows, macroβ¦) |
A reserve announcement might bump it 10-20%, but you'd need to filter out all the other noise to know if your thesis was actually right. |
A prediction market lets you bet on the specific thing. Is the reserve going to happen by the end of 2026? The end of 2027? |
Pick the market, pick the side, size the position, done. |
That's the edge here⦠|
Not "I know crypto prices better than the market." (You probably don't. Few do.) |
Instead, it's "I follow the meta around crypto - the regulation, the politics, the company stories - more closely than the median Kalshi trader does." |
And it's tradeable for the first time. |
TL;DR |
Prediction markets are starting to look more and more like theyβre crypto's third PMF moment: |
The volume is real, the regulation is real, and the use case is something you can actually do this afternoon. |
If you want to try it - Kalshi is giving Milk Road readers $10 free when you trade $10. |
Go pick a market (the BTC reserve, GameStop/eBay, whatever you've got a view on) and put your reading habit to work: |
Trade $10 β Claim $10 on Kalshi |
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