One key aspect of market efficiency is its ability to react instantly to major events, particularly in cryptocurrency and foreign exchange (FX).

Whether it's a sudden tariff announcement or a tweet from a high-profile political figure, these markets adjust in real-time, often showing remarkable similarities in their speed and depth.

A recent study by LMAX Group, dubbed Millisecond Reactions to Market Shocks, highlighted how quickly markets respond to major global events. It compared the real-time movements of cryptocurrency and FX markets.

BTC/USD and EUR/USD

Key events such as Federal Reserve rate decisions, political announcements, and even fake news headlines have demonstrated how both markets can react almost instantaneously, with moves often measured in milliseconds.

“Our latest findings show BTC’s correlation to FX markets, the depth of markets even around political events like Trump’s social media posts. The results emphasise the need for traders to have access to high-frequency data and liquidity, commented Bilal Hafeez, the CEO and Head of Research at MacroHive.

For instance, examining price fluctuations just seconds after a Fed decision or a political tweet shows a significant portion of the market’s price action, often allowing for predictive insights that can inform future trades.

An in-depth look at the Fed's rate decisions reveals that both BTC/USD and EUR/USD markets respond almost immediately after the announcement.

Interestingly, while both markets exhibit similar patterns of initial reaction, their volatility levels differ. Cryptocurrencies like Bitcoin tend to experience higher volatility compared to traditional FX pairs like EUR/USD.

This distinction highlights the different nature of these asset classes: while broader economic indicators influence FX markets, crypto markets are often more sensitive to sentiment and news, leading to larger price swings.

Political Events and Their Market Impact

Political events, particularly those linked to the actions of influential figures like US President Donald Trump, have a profound effect on markets. One such instance was Trump's announcement on February 3, 2025, about pausing tariffs on Mexico and Canada.

This kind of market movement highlights the level of sensitivity in crypto markets to breaking news, even when the information later proves to be false.

In particular, the data provides insights into the behavior of market makers and large investors, who may place orders deeper in the order book to minimize their impact on the market.

Source: Finance Magnates