The Impact of Donald Trump's Approval Ratings on the Financial Markets: Presidential Endorsement, Bitcoin, and Tesla

Abstract

There was a recent U.S. presidential election (2024), and Trump was elected president. During the campaign, Trump announced that he would designate Bitcoin as a strategic asset for the U.S. Elon Musk publicly supported Trump and also donated a large sum of money to his campaign. We conducted a data analysis on how these actions contributed to Bitcoin, Tesla, and S&P500, using the Vector Auto-Regression, Granger Causality, and Impulse Response Function. The result is that Trump's Polymarket approval rating had a negative impact on both the S&P 500 and Bitcoin at a 99% confidence level, while it had no effect on Tesla stock. As a robustness check, we also examined Harris' Polymarket approval rating, which showed a positive effect on the S&P 500 at a 95% confidence level and on Bitcoin at 90% confidence level.

Keywords: Bitcoin, Tesla, political events, financial markets, approval ratings, cryptocurrency