Employing a time-varying multifractal approach, we highlight the influence of political narratives and speculative expectations surrounding the second presidency of Trump on Bitcoin efficiency. Bitcoin exhibits persistent dynamics, deviating from the ideal efficiency benchmark. During the anticipation of Trump’s victory, Bitcoin returns became more predictable (less efficient) due to narrative-driven speculation and arbitrage, whereas during his presidency, efficiency increased, reflecting institutional adoption and favorable regulations. In recent months, Bitcoin has regained its natural balance, with efficiency converging to levels observed in non-speculative periods. Thus, US political narratives function as mechanisms of speculative market arbitration, distorting efficiency while favoring decentralized assets.
Araujo et al. (Thu,) studied this question.