🥛 Crypto's third PMF moment is here 👀

GM. This is Milk Road, the crypto newsletter that's teaming up with Kalshi to interrupt your regularly scheduled ‘Spicy Take Sunday’ edition to ask you a weird question…

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 ‘concept of a plan’ 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 that’s 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 that’s changing - fast. 👇

Source: Kalshi

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.

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…

Source: @RWA

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, I’m 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?

Source: Kalshi

They’re 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 ‘half cash, half stock’...

The math was as ambitious as it was meme-able:

Source: @growing_daniel

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%.

Source: Kalshi

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 ‘NO’ on Kalshi at 9am on the 5th of May, and sold it by 1pm the same day to make more than a 50% return.

That’s 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 AIN’T 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.

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.

HERE’S WHERE YOU COME IN

What’s 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, à 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 2024…

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)…

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, macro…)

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.