Political uncertainty and cryptocurrency futures and spot market efficiency: evidence from the 2024 U.S. presidential election

This study investigates the impact of the 2024 U.S. presidential election on the relationship between cryptocurrency futures and spot markets. Using a range of financial econometric techniques, we analyze daily returns of Bitcoin futures and spot markets from December 2017, to January 2025. The primary findings are as follows. First, we observe that the spot leads the futures, contradicting theoretical expectations. Second, the relationship between futures and spot markets becomes more segmented during the election, indicating a disruption in pricing mechanisms. Third, we identify a significant negative relationship between trade volume and the degree of integration between futures and spot markets during the election, suggesting that speculative trading may drive market inefficiencies. These suggest that cryptocurrency market inefficiencies are not solely driven by idiosyncratic shocks but also influenced by broader macroeconomic and political events. This highlights the political uncertainty as a significant factor in determining the efficiency of cryptocurrency markets.