In June 2025, a public feud between President Donald Trump and billionaire entrepreneur Elon Musk sent shockwaves through financial markets, particularly impacting Bitcoin and the broader cryptocurrency ecosystem. Their falling-out, described as an unprecedented spectacle by a senior lecturer at Queen Mary University in London, stems from a disagreement over a major Republican-backed tax and spending bill, which Trump has called his “big, beautiful bill.” This legislation, narrowly passed by House Republicans in May 2025, includes extended tax cuts, stricter rules for federal benefits, and an increase in the national debt ceiling, which is projected to widen the budget deficit by approximately $600 billion in the next fiscal year. Musk, serving as a special government employee leading the Department of Government Efficiency (DOGE), has criticized the bill as a “disgusting abomination” due to its potential to exacerbate the national debt. Trump responded by threatening to terminate Musk’s government subsidies and contracts, particularly those tied to SpaceX, which relies heavily on federal support for astronaut transport and supply missions to the International Space Station. Musk retaliated with inflammatory rhetoric, calling for Trump’s impeachment and hinting at unreleased files implicating Trump, though these claims lack substantiation.
This public spat has had tangible market impacts. Tesla’s stock plummeted by 14% on Thursday, June 5, 2025, though it recovered slightly by 5% the following day. The crypto market, already sensitive to political and economic uncertainty, saw Bitcoin drop by 1.7% to around $102,000, with $324 million in Bitcoin long positions liquidated and the broader crypto market declining by 3%. A meme coin tied to Trump’s personal brand also fell by 10%, reflecting the market’s sensitivity to the feud. The conflict has introduced significant uncertainty, particularly for cryptocurrencies, which are highly reactive to sentiment-driven events. Musk’s influence on crypto markets is well-documented, with his past endorsements of Dogecoin and Bitcoin causing significant price movements. Similarly, Trump’s pro-crypto stance during his 2024 campaign, including promises to make the U.S. the “crypto capital of the planet” and establish a strategic Bitcoin reserve, fueled a surge that pushed Bitcoin to a record high above $100,000 after the election. However, the feud has raised fears of policy reversals, with Trump’s threat to cut Musk’s subsidies and Musk’s criticism of Trump’s fiscal policies leading investors to question the stability of the administration’s crypto-friendly agenda. Musk’s comments on Trump’s tariff plans as a “recession trigger” have further heightened concerns about economic instability, dampening bullish sentiment in the crypto market.
While the Musk-Trump feud has been a prominent narrative, it’s not the sole driver of Bitcoin’s recent decline from a high of $112,000 to around $104,600 by June 6, 2025. Bitcoin’s price surged dramatically in late 2024, driven by institutional adoption, the approval of spot Bitcoin ETFs, and the April 2024 Bitcoin halving, which reduced the supply of new coins. By November 2024, Bitcoin hit an all-time high above $93,000, fueled by Trump’s re-election and his pro-crypto rhetoric. However, this rapid ascent led to overheated market conditions, with profit-taking activity reaching a three-month high. Technical analysis indicates bearish patterns, with the 50-day moving average on the four-hour chart suggesting a weakening short-term trend. The aggressive correction was likely inevitable due to market makers seeking liquidity to push prices higher in the future. The crypto market also experienced nearly $1 billion in liquidated leveraged long positions, with Bitcoin accounting for $324 million. This cascade of liquidations was triggered as Bitcoin sliced through key support levels, with investor panic rising. Broader market declines, including altcoins like Ethereum and Ripple, further exacerbated the downturn.
Macroeconomic factors have also played a role. Trump’s proposed tariffs, including a 60% tariff on Chinese goods, have raised concerns about trade tensions and potential economic slowdown, which could reduce speculative investment in high-risk assets like Bitcoin. Uncertainty around the Federal Reserve’s interest rate decisions has added pressure, with the Fed signaling a cautious approach to rate cuts while Trump pushes for immediate reductions to offset tariff-induced inflation. These mixed signals have contributed to a “risk-off” mood, with Bitcoin behaving as a high-beta macro asset tied to investor risk appetite. Additionally, Trump’s executive order establishing a U.S. strategic Bitcoin reserve, announced on March 6, 2025, disappointed investors expecting immediate Bitcoin purchases. The reserve will be capitalized with Bitcoin already held by the U.S. government from criminal forfeitures, with no clear plan for additional accumulation, leading to a 5% price drop that later stabilized around $87,000.
Predicting Bitcoin’s price remains challenging due to its volatility and sensitivity to multiple factors. Some analysts predict Bitcoin could drop to $97,000 or even $74,000 in the near term, based on current bearish patterns and uncovered liquidity gaps below the current price. The $95,000 level, recently breached, was a key resistance zone, and failure to hold above $100,000 could signal further declines. The Musk-Trump feud continues to weigh on sentiment, with fears of policy uncertainty and potential subsidy cuts for Tesla impacting Musk’s ability to influence crypto markets positively. Declining retail demand and profit-taking by long-term holders could exacerbate downward pressure. Ongoing tariff disputes and inflation concerns could further dampen risk appetite, potentially pushing Bitcoin toward lower support levels like $70,000 if no new catalysts emerge.
Despite short-term risks, Bitcoin’s long-term outlook remains supported by strong fundamentals. The 200-day moving average indicates strong long-term momentum, bolstered by the 2024 halving and increasing institutional adoption via ETFs. Trump’s administration, despite the feud, remains broadly crypto-friendly, with key figures advocating for Bitcoin’s role as a strategic asset. The U.S. Bitcoin reserve, even if imperfect, could inspire other nations to follow suit, potentially driving prices to $200,000 by year-end or $500,000 by 2029. Some analysts suggest Bitcoin is forming a bottom, supported by Trump’s softening stance on tariffs and a potentially dovish Federal Reserve. A recovery toward $100,000 is possible if equities and risk assets rebound. Others predict Bitcoin could reach $200,000 in 2025 and $500,000 before Trump’s term ends, while some see it hitting $1 million by 2030, based on network growth.
The Musk-Trump feud may amplify short-term sentiment, but market dynamics suggest the correction was driven by technical factors and broader economic concerns. Bitcoin’s volatility is not new, and corrections following rapid bull runs are common. Musk’s influence on crypto markets appears to be waning, with recent announcements failing to move markets, unlike his past crypto-related statements. Trump’s Bitcoin reserve, while symbolically important, lacks the immediate impact investors hoped for. Investors should focus on Bitcoin’s underlying value proposition as a decentralized, scarce asset rather than overreacting to political drama. Moving forward, several factors will shape Bitcoin’s trajectory: the resolution of the Musk-Trump feud, clarity on Federal Reserve policy, global adoption trends, and technical indicators like Bitcoin’s ability to hold above $100,000 or break below $95,000. Whether Bitcoin falls further or rebounds to new highs, its resilience will depend on its ability to weather political storms and capitalize on growing institutional and sovereign adoption.
Disclaimer: This content is for informational purposes only and does not constitute investment advice. Cryptocurrency markets are highly volatile, and investors should conduct their own research and consult with financial professionals before making decisions.
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