1. Direct trigger: political game triggers market panic
Risk of sudden policy changes
Trump threatens to end government subsidies and contracts for Tesla and SpaceX (involving Tesla's more than $22.5 billion in federal contracts)
), directly impacting the market's profit expectations for Musk's companies. Since Tesla is a benchmark technology stock in the US stock market, its single-day 14.26% plunge (market value evaporated $150 billion)
) triggered a chain sell-off, and risk aversion spread to the cryptocurrency market.
Musk’s influence on the crypto market inertia
Musk, as the "Godfather of the Cryptocurrency Circle", has influenced the trend of cryptocurrencies such as Dogecoin through Twitter.
This time, his fierce confrontation with Trump (such as threatening to retire the SpaceX Dragon spacecraft)
), combined with the revelation that Trump was involved in the Epstein case
, causing investors to worry that damage to his personal credibility could weaken his appeal to the crypto market, triggering a sell-off.
2. Deep policy logic: Conflict between tax reform bill and energy policy
Tax reform bill hits crypto industry expectations
Trump's "Big and Beautiful Bill" cancels electric vehicle tax credits 7 years ahead of schedule (Tesla's profit is expected to lose $1.2 billion
), and retain subsidies for traditional energy
The market interpreted this as a shift in US clean energy policy, which weakened the green technology narrative that is highly associated with cryptocurrencies, causing ETH and other "energy transition concept coins" to bear the brunt.
。
Increasing regulatory uncertainty
Musk proposed a vote to create a new political party (80% of netizens supported it)
), suggesting that it may challenge the existing political landscape. Combined with the Trump administration’s previous positive attitude towards Bitcoin ETFs (such as the Truth Social Bitcoin ETF plan
), the conflict between the two sides has caused the market to worry that the regulatory framework for cryptocurrencies may be repeatedly affected by political struggles, and institutional investors have chosen to temporarily leave the market.
。
3. Market sentiment resonance: leverage liquidation and liquidity crisis
High leverage positions chain liquidation
Bitcoin was approaching $100,000 before the conflict, and ETH was in the $2,400-2,680 range
The sudden black swan event caused the price to quickly fall below the key support level (Bitcoin 101425 → $100,000 edge, ETH fell to $2440)
), triggering the forced liquidation of about $3 billion of long leveraged contracts, forming a negative feedback loop of "fall → liquidation → sell-off"
。
Institutional hedging strategies shift synchronously
JPMorgan Chase and other investment banks downgraded technology stocks due to Tesla's plunge, and some hedge funds were forced to reduce their holdings of crypto assets to balance their portfolios
Meanwhile, Trump Media Group (DJT) fell 8%.
This further hit market risk appetite and caused funds to flow into traditional safe-haven assets such as government bonds and gold.
4. Prediction of long-term impact: the deep connection between politics and the crypto market
Musk’s political capital is eroding
Musk is a core member of the Trump administration (formerly the head of the "Government Efficiency Department")
) to a public split, which could affect regulatory approval of the X Money payment system it promoted
, weakening expectations for the integration of cryptocurrency and traditional finance.
The vulnerability of Trump’s crypto strategy
Despite Trump's push for Bitcoin national reserves
, but its policies are highly dependent on the support of allies. This conflict exposed the divisions within the Republican Party on the crypto industry (such as Senate leaders saying it would not affect the tax reform process).
), the risk of policy continuity is rising, and the safe-haven attribute of Bitcoin as "digital gold" is covered by the political risk premium in the short term.
Conclusion: Market clearing under multi-dimensional risk accumulation
The essence of this plunge is the triple blow of "policy black swan + opinion leader credibility crisis + high leverage market structure". In the short term, Bitcoin $100,400 and ETH $2,320 will become the key psychological support levels.
In the medium and long term, we need to observe the rebalancing of the two parties’ positions on crypto regulation in the United States, and whether Musk can reshape policy influence through new party proposals.
Investors should prioritize reducing leverage and pay attention to the White House's actual handling of the SpaceX contract.
, which will be a key signal to judge the recovery of market sentiment.
