Rate Cut = Long BTC

This strategy demonstrates how to use prediction market data to inform crypto trading decisions. The thesis is simple: Fed rate cuts are bullish for Bitcoin.

Visual Overview

The Concept

Thesis: When prediction markets show a high probability of a Federal Reserve rate cut, risk assets like Bitcoin tend to benefit. Lower interest rates mean cheaper borrowing and more liquidity in the system.

Entry: Long BTC when rate cut odds exceed 60%

Exit: Close the position when odds drop below 40%, or hit stop loss / take profit

Strategy Setup

Data Sources

This strategy uses two data sources:

The prediction market data provides real-time odds from Kalshi's Fed decision markets.

Analysis Block: signal

Create an Advanced Block with these outputs:

odds: fed.yes_odds
high_odds: odds > 0.60
low_odds: odds < 0.40

What each output does:

• odds — Current probability of a rate cut (0 to 1)
• high_odds — True when rate cut probability exceeds 60%
• low_odds — True when rate cut probability drops below 40%

Entry Rule

Risk Management

Stop Loss:

Take Profit:

Conditional Exit:

This exit rule closes the position if our thesis is invalidated (odds drop significantly).

Risk Settings

Why This Works

1. Forward-looking signals — Prediction markets aggregate information from many participants, often pricing in rate changes before they happen
2. Clear thesis — Simple cause-and-effect relationship between Fed policy and crypto
3. Defined invalidation — If odds drop, our thesis is wrong and we exit

Variations

Add Price Confirmation

Only enter when BTC is also showing strength:

price_above_ma: btc.close > EMA(btc.close, 50)
entry: signal.high_odds AND price_above_ma

Momentum Entry

Enter on rising odds rather than absolute level:

odds_1d_ago: odds[6]  # 6 bars = 1 day at 4h
odds_rising: odds - odds_1d_ago > 0.05
entry: odds > 0.50 AND odds_rising

Multi-Asset

Apply the same signal to multiple assets:

# Add ETH data source
eth_entry: signal.high_odds
sol_entry: signal.high_odds

Tips

1. Monitor FOMC dates — Odds can move quickly around Fed meetings
2. Watch for leg expiration — Prediction markets have different contracts for different meeting dates
3. Consider volume — Higher volume in prediction markets = more reliable signal
4. Backtest across cycles — Rate cut cycles don't happen often, historical data is limited