Kalshi Users Expect Bitcoin to Drop Another 27%

Users on the prediction market Kalshi seem to be worried by the massive drawdown Bitcoin is suffering now. According to the data provided by this platform, the crypto community expects the world’s largest cryptocurrency to drop even lower.

Users on the prediction market Kalshi seem to be worried by the massive drawdown Bitcoin is suffering now. According to the data provided by this platform, the crypto community expects the world’s largest cryptocurrency to drop even lower.

Today, the bellwether cryptocurrency has recovered by 3.25%, rising to $81,740 where it is trading at the time of this writing.

Over the past week, Bitcoin has been printing large declines on a daily basis with attempts to rise after that. Overall, since the end of last week, BTC has faced a staggering 18.4% correction, having fallen from as high as $99,500 zone.

According to the prediction trend, users believe that Bitcoin is likely to lose another 27% and decline to the $58,000 price level.

However, if the cryptocurrency manages to rise, traders on Kalshi see the possibility of it climbing to $108,000.

The probability of Bitcoin dropping to $58,000 is currently assessed at 24%, while the possibility of it reaching $108,000 is indicated at 18%.

Earlier this week, predictions for Bitcoin dropping to $48,000 were at 42%, whereas possibilities of BTC rallying to $128,000 were at 12%.

Despite the recent rally in the market, driven largely by the U.S. Federal Reserve's (Fed) signals of a slower pace of interest rate hikes, traders on the prediction market are still pessimistic on Bitcoin’s price performance in the short term.

Bitcoin price drops despite Fed signals

On Wednesday, the Fed increased the benchmark borrowing cost by 25 basis points, as widely expected, and signaled that it might pause the tightening cycle soon to assess the impact of the rapid rate rises on the economy.

The U.S. dollar also fell sharply after the Fed statement, rendering crypto less expensive for overseas buyers. In response to the Fed’s decision and the subsequent weakness in the greenback, Bitcoin rose as high as $99,400 on Thursday.

However, the cryptocurrency lost more than half of those gains by Friday, as traders booked profits on the recent rally and grew concerned about the possibility of the Fed continuing to hike rates for longer than anticipated.

According to traders polled by the Wall Street Journal, there is a better-than-even chance that the Fed will pivot to cutting interest rates by the second quarter of 2024.

The crypto market tends to perform well when rates are low since borrowing costs are cheaper for startups and other businesses, boosting economic growth and, in turn, risker assets like crypto. But when rates are high, as they have been since early 2022, it usually weighs on crypto prices.

"We're not expecting any rate cuts this year. We're expecting the Fed to keep rates at the peak for the better part of the year and then start cutting in early 2024," said Ben Phelps, a crypto trader at TokenChain. "This anticipation of rate cuts is already priced into crypto, and I think we'll see a range-bound market in the near term."

According to TokenChain data, Bitcoin has fallen 18.4% since the beginning of the year. The cryptocurrency is down 7.5% over the past week.