Musk finally admitted it! The tech mogul who once vowed to 'reform the U.S. government with business logic' has, after six months of political turmoil, publicly lamented on May 27: 'The Department of Government Efficiency has become the scapegoat for all problems, even those unrelated to us are blamed.' Behind this statement is Musk's fall from 'political star' to 'public enemy number one,' and a tragic microcosm of the collision between business magnates and political machines—one that is profoundly affecting the landscape of the cryptocurrency market.

1. Department of Government Efficiency: Musk's Political Waterloo

1. Initial Intent vs. Harsh Reality

During the 2024 election, Musk spent $300 million supporting Trump and, after his victory, led the establishment of the 'Department of Government Efficiency' (DOGE), claiming to cut $2 trillion in federal spending. However, this seemingly ambitious plan fell into a political quagmire from the start:

• Power Disenfranchisement: DOGE is merely an advisory body of the White House, lacking formal establishment and budget authority; Musk's team can only pressure various departments through executive orders, yet they face compliance issues from powerful departments like the Department of Defense and the Department of Education.

• Reform Farce: Musk attempted to use AI to audit government spending, but the team's lack of political experience led to blunders such as 'accidental deletion of healthcare data' and 'freezing veterans' benefits,' further exacerbating public distrust in the government.

• Backlash: The 146,000 government credit cards prompted by DOGE were deactivated, and spending was cut by $55 billion, directly impacting the interests of the civil servant community. 1,400 protests erupted across the U.S., Tesla stores were set on fire, and owner information was leaked, with Musk even receiving death threats.

2. Unexpected 'Contribution' to the Cryptocurrency Market

Despite the difficulties in reforming DOGE, its abbreviation shares the same name as Dogecoin (DOGE), unexpectedly sparking market speculation. When Trump announced the establishment of the DOGE department in November 2024, the price of Dogecoin surged 20% in a single day, with its market value briefly exceeding $40 billion. Musk jokingly remarked on social media that 'the U.S. was saved by Meme coins,' further boosting Dogecoin's popularity. However, this connection also deeply tied Dogecoin's price to Musk's political fate—when the DOGE department became embroiled in scandal, Dogecoin's price also fell, creating a 'political risk premium.'

2. Tariff War: Tesla's Life-and-Death Challenge

1. The Fatal Blow of Trump's Tariff Policy

Starting April 2025, the Trump administration imposed 'reciprocal tariffs' on global trading partners, with tariffs on EU automotive components reaching as high as 145%, directly impacting Tesla's supply chain:

• Cost Avalanche: 50% of Tesla's U.S. factory components rely on the Chinese supply chain, with tariffs increasing the cost of each vehicle by about $5,000. Musk was forced to bear 19% of the tariffs out of pocket, suppliers absorbed 6%, and ultimately the costs were passed on to consumers.

• Market Shrinkage: The EU retaliated with a 50% tariff on the Tesla Model 3, causing European sales to plummet by 37%. More critically, Trump threatened tariffs on the Mexican factory, which accounts for 30% of Tesla's battery production.

• Allies Turning Against Each Other: Musk once proposed 'zero tariffs' between the U.S. and Europe but was publicly humiliated by Trump's trade advisor Navarro: 'Tesla is just an assembly plant.' The two engaged in a social media spat that triggered a plunge in U.S. stocks, which The New York Times called 'the most expensive war of words in history.'

2. The Ripple Effect in the Cryptocurrency Market

Trump's tariff policy not only dealt a heavy blow to Tesla but also impacted the cryptocurrency market through two channels:

• Capital Flow Back to Traditional Markets: Goldman Sachs warned that the supply chain crisis caused by tariffs could push U.S. Treasury yields to 5.5%, leading capital to flow back to traditional markets for safety. The correlation between Bitcoin and U.S. stocks soared to 0.85, and when the three major U.S. stock indices plummeted, Bitcoin was forced to follow down to the critical support level of $109,000.

• Heightened Policy Uncertainty: Trump's protectionist trade policies have triggered market concerns about a global economic recession, putting pressure on risk assets. The long-short ratio in the derivatives market dropped to 0.6:1, and funding rates hit a six-month low, with short positions completely crushing long positions.

3. From Political Allies to Estrangement

1. Three Major Triggers for the Breakdown of Relations

• Conflicts of Interest: Musk's core demand is to lower tariffs and expand the global supply chain, which directly conflicts with Trump's 'America First' policy. Their differences on issues such as tariffs and immigration have become increasingly public.

• Public Pressure: Tesla's stock price plummeted 22% due to Musk's political stance, with investors collectively demanding he 'either commit to politics or return to the CEO position.' On May 20, Musk announced significant reductions in political contributions, stating, 'I have done enough.'

• Trust Crisis: The number of times Trump mentioned Musk on social media dropped from 11 times a week to zero, and during a White House meeting on May 24, he shifted the blame for the tariff policy onto Musk: 'Certain tech giants should be responsible for the supply chain issues.'

2. Musk's Retreat and Reflection

On May 25, Musk announced the resumption of around-the-clock work, focusing on Tesla's Cybertruck production and Starship launches, stating, 'I will not leave the CEO position for the next five years.' In a rare reflection during an interview with the Financial Times, he remarked: 'I overestimated political influence and underestimated the stubbornness of the bureaucratic system. A businessman participating in politics is like pouring rocket fuel into a swimming pool—seems spectacular but actually leads to self-destruction.' This shift in attitude has directly impacted the cryptocurrency market: Dogecoin's price fell due to Musk's political 'withdrawal,' while Bitcoin continued to be pressured by concerns over policy uncertainty.

4. Insights from the Cryptocurrency Market: Political Risks and Opportunities Coexist

1. Short-term Risks

• Policy Uncertainty: Trump's tariff policies and the mess of the DOGE department have put the cryptocurrency market at higher policy risk. If the U.S. further tightens regulation on cryptocurrencies or trade frictions escalate, Bitcoin may test the critical support level of $105,000.

• Weakening Musk Effect: Musk's political setbacks may lead him to reduce his public support for Dogecoin, while new plans like X Money may support Dogecoin, but they are unlikely to offset the loss of market confidence in the short term.

2. Long-term Opportunities

• Technological Upgrades and ETF Expectations: The core development team's 'DogeNet 3.0' plan is expected to launch a test net in June, and if successful, will enhance its cross-chain interoperability. Additionally, Grayscale's DOGE spot ETF application is still under SEC review, and if approved, could attract $3-5 billion in institutional funds.

• Strengthening Decentralized Narrative: Musk's political predicament has instead highlighted the value of cryptocurrency's 'depoliticization.' The social media topic #FreeDoge saw over 100 million exposures in a single day, reflecting renewed market interest in decentralized assets.

Conclusion: The Cost of Political Adventure and the Rebirth of the Cryptocurrency Market

Musk's political gamble is essentially a tragedy of a businessman challenging political rules with market logic. The failure of the Department of Government Efficiency exposed the impotence of 'technocracy' in a complex political ecosystem; the backlash of the tariff policy confirmed the fatal damage of 'America First' to globalized enterprises. Now, although Musk has 'awakened,' the brand damage to Tesla, the mess of DOGE, and the rift with Trump will all become scars that are difficult to heal in his business empire.

For the cryptocurrency market, Musk's political setbacks represent both risks and opportunities: In the short term, it is necessary to be vigilant about policy uncertainty and the fading Musk effect; in the long term, attention can be paid to technological upgrades and new opportunities brought about by a decentralized narrative. As the Dogecoin community states: 'When the political bubble bursts, true value will emerge.' In this game of business and politics, whether cryptocurrency can be reborn from the storm may depend on its ability to truly break free from the shackles of power and return to its decentralized roots.