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Breaking from the herd: Evidence from the 2024 U.S. election

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  • de Almeida, Israel Nunes
  • Palazzi, Rafael Baptista
  • Klotzle, Marcelo Cabus

Abstract

We examine how the 2024 U.S. presidential election affected herding behavior in cryptocurrency markets using a synthetic difference-in-differences approach. Treating Bitcoin as the affected unit and 28 major altcoins as the control pool, we find that the election significantly reduced Bitcoin’s cross-sectional absolute deviation relative to its pre-event mean. The effect persists after controlling for market volatility, liquidity (the Amihud measure), and momentum, and is validated by placebo tests. Our findings suggest that political uncertainty triggers market segmentation in digital assets, with Bitcoin increasingly functioning as a distinct asset class rather than as part of the broader cryptocurrency universe.

Suggested Citation

  • de Almeida, Israel Nunes & Palazzi, Rafael Baptista & Klotzle, Marcelo Cabus, 2026. "Breaking from the herd: Evidence from the 2024 U.S. election," Economics Letters, Elsevier, vol. 259(C).
    • Handle: RePEc:eee:ecolet:v:259:y:2026:i:c:s0165176525006263
    DOI: 10.1016/j.econlet.2025.112789
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