Political Shocks Are Becoming Crypto Market Events

Financial markets are mostly driven by economic considerations: interest rates, economic growth, specific sectors’ dynamics, and individual companies’ successes or failures. But they are also impacted by the wider events in the world: geopolitical crises, political shifts, and other black swans.

For a while, cryptos have mostly been reacting to mostly crypto-related news, especially when the technology was still new, and crypto prices were rising due to increasing awareness and participation of first the greater retail investing public, and then financial institutions.

However, in the more recent years, cryptos have started to mature as an asset class and start behaving more in line with other financial assets like stocks and bonds.

One sign of this evolution is that crypto prices are now reacting to breaking news not directly relating to cryptocurrencies, but merely potentially impacting them. This effect is not limited to Bitcoin, but also other cryptocurrencies, especially politically themed tokens and speculative assets.

One recent paper from two researchers at the Ludwig Maximilian University of Munich (Germany) and the WU Vienna University of Economics and Business (Austria) has investigated the impact of such a breaking news event on cryptos: the July 2024 assassination attempts on Donald Trump.

It was published in Finance Research Letters¹, under the title “Guns’N Roses: Political assassination attempt and cryptocurrency markets”.

Why Would Donald Trump Matter For Crypto?

Besides the obvious fact that the assassination of a presidential candidate would be an important news story, the 2024 campaign was split along partisan lines when it came to cryptos. Overall, the republican candidate was seen as more friendly to crypto assets compared to its competitor. In that respect, Trump winning the election was important for today’s current acceptance of cryptos by mainstream financial institutions.

“Donald Trump’s return to the presidency brought a visible, market-salient policy stance toward digital assets. Throughout 2024, well before the season’s flagship crypto conferences, his campaign made pro-crypto messaging.”

When the assassination attempt occurred, two successive ways to see the event could influence cryptos:

• First, a jump in uncertainty around leadership continuity and policy path.
• Second, conditional on the resident’s survival, a reinforcement of the perceived durability of a pro-crypto agenda.

For researchers, the event offers a rare, sharp, and plausibly exogenous test of how political shocks transmit into digital-asset returns, volatility, and cross-asset co-movements.

Their hypothesis was to check if the price movement following the assassination attempts is likely to be a result of the event itself, and the assassination having failed. And then to determine which crypto tokens reacted the most or in a synchronized fashion.

How Cryptos Reactions Were Measured

To analyze the effect the assassination attempt had, the researchers gathered minute-by-minute data prices for the ten largest cryptocurrencies around the event window.

The dataset comprises 20,160 high-frequency trading observations covering the period 6–20 July 2024, providing a symmetric window of one week of data before and after the July 13, 2024, assassination attempt on Donald Trump.

Source: Finance Research Letters

They used the “BEKK-MGARCH model” to measure correlations and an “event-study of cumulative abnormal returns” (CARs) using a pre-event benchmark period to isolate the shock.

This event in particular was chosen because it was unexpected, had obvious far-reaching consequences for every observer, and the clarification of what actually happened allowed different narratives to succeed one another.

What The Study Found

Globally Positive Reactions

While in the pre-event period, most cryptocurrencies exhibited relatively stable cumulative abnormal returns (CARs), the post-event phase is characterized by notable gains across the majority of assets.

Post-event CARs are uniformly positive and statistically significant across all cryptocurrencies, with an average gain of 15.167% for the market as a whole.

Source: Finance Research Letters

As none of the cryptocurrencies in the sample experienced negative CARs following the event, this reinforces the interpretation of a broadly positive or stabilizing market sentiment in the aftermath of the attempted assassination.

Not All Assets Reacted Equally

Some cryptos reacted much more in sync with each other than others. For example, DOGE, ETH, SHIB, and SOL all move in tight coordination with each other.

“These findings underscore the systemic impact of the Trump assassination attempt on the broader cryptocurrency ecosystem, emphasizing the market’s sensitivity to geopolitical events and its potential vulnerability to external shocks.”

This reinforces the idea of spillover in reactions among different cryptos.

Source: Finance Research Letters

However, some others like AVAX and LINK displayed notable declines in mean covariance post-event, unsynchronizing from the rest of the cryptos.

Overall, it appears that narrative-driven tokens and high-beta tokens (higher volatility) reacted much more strongly to the assassination attempts.

“This heterogeneity may reflect differing underlying fundamentals, market liquidity, and investor composition.”

Lastly, XRP gives us an example of another situation. This specific protocol showed strong pre-event price movement, driven by favorable market sentiment around the federal court ruling on July 13, 2024, which provided greater regulatory clarity regarding XRP’s legal classification.

As such, it still displayed post-event gains, but it can get hard to separate fully from the positive preexisting trend in this specific token. However, as the effect is as strong as for other tokens in the week following the assassination attempts, it is likely that the preexisting trend is not fully responsible alone for these gains either.

What Does It Matter To Investors?

The conclusion that major political events are impacting the immediate price movement of cryptos is, of course, an important one for traders and investors.

This is not really a surprising discovery, but it is important to have a statistical and academic confirmation of the idea, especially when the gains can be as high as an average 15% in just a week.

In the middle of a contested presidential election and a partisan split regarding crypto policies, the assassination attempts had immediate and obvious potential consequences for crypto investors, something the crypto market understood quickly.

Another important conclusion is that protocol-specific fundamentals shape the transmission of political shocks.

So it is not enough to just assess the effect on crypto as a whole. Instead, cryptos with high volatility or narrative-driven are more likely to be affected by shocking and unexpected events.

Similarly, even if a token is already reacting to positive trends before an event, this does not preclude it from reacting in a synchronized fashion to other tokens.

Further research should be done to analyze other similar events, like for example the start of the war in Ukraine, or similar important geopolitical news, to analyze how cryptos reacted to other events that have a less obvious direct consequence for crypto markets.

Study Referenced

^{1. Luca Galati, Carmine Russo. Guns’N Roses: Political assassination attempt and cryptocurrency markets. Finance Research Letters. Volume 103, August 2026, 110141. https://doi.org/10.1016/j.frl.2026.110141}