ARK Invest and Kalshi: How a Wall Street Firm Is Using Crypto Prediction Markets to Make Stock Picks

TLDR

• ARK Invest will use Kalshi prediction market data to inform its investment decisions
• The data will be used for research, risk management, and hedging portfolio positions
• ARK CEO Cathie Wood called prediction markets “a natural next step for innovation in financial research”
• The US Federal Reserve and Cornell University have also flagged prediction market data as valuable
• Kalshi was recently valued at $22 billion after a $1 billion funding round

ARK Invest, the asset management firm led by Cathie Wood, has announced it will use data from Kalshi, a prediction markets platform, to help guide its investment decisions.

The firm said it plans to use the data in three main ways: to supplement its existing research with real-time market expectations, to track performance indicators like trading volume, and to manage risk around specific events.

ARK will also use Kalshi to hedge against outcomes that could affect its portfolio, including macroeconomic risks and sector-level exposure.

ARK has also been working directly with Kalshi to list new markets on topics the firm tracks closely.

Kalshi CEO Tarek Mansour confirmed that several of those markets are already live on the platform, including non-farm payroll markets and deficit-to-GDP ratio markets.

What Are Prediction Markets?

Prediction markets allow users to trade on the outcome of future events. Because real money is at stake, the theory is that prices reflect genuine, unbiased expectations about what will happen.

Kalshi is one of the largest regulated prediction markets in the US. Its main rival, Polymarket, operates primarily in crypto.

Prediction markets surpassed $10 billion in monthly trading volume last year and have drawn growing interest from institutional players.

Other Institutions Are Paying Attention

ARK is not alone in seeing value in this data. Last month, researchers at the US Federal Reserve published findings arguing that Kalshi data could better measure macroeconomic expectations in real time than existing tools.

Cornell University has also studied prediction market data, using figures from Polymarket to analyze how traders responded to political events in real time, including the 2024 presidential debates and the assassination attempt on Donald Trump.

Kalshi recently closed a $1 billion strategic funding round that valued the company at $22 billion.

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