In the political theater of the absurd, which American domestic politics increasingly resembles, a new, captivating play is unfolding. In the lead roles are two titans with enormous egos and multi-million audiences on social media: POTUS Donald Trump and the self-proclaimed 'Emperor of Mars' Elon Musk. Their once-flourishing 'bromance', cemented by generous campaign donations and mutual courtesies, burned to the ground live on air, leaving behind smoking ruins on the stock market and a new wave of panic among crypto investors.
Just yesterday, it seemed that this alliance was made in heaven – or, at least, in the corridors of Mar-a-Lago. But, as is often the case in stories involving Donald Trump, the idyll turned out to be short-lived. The sticking point was a new ambitious tax and spending bill, which for Musk, whose electric vehicle manufacturing business directly depends on government subsidies, was an 'abhorrent monstrosity' due to cuts in tax benefits. The reaction was swift: a war of words on social media quickly escalated into a full-scale information war with threats and accusations.
Domino effect: from Tesla stocks to Bitcoin
The already nervous financial markets reacted with predictable panic. The first victim was Tesla: shares plummeted over 14%, wiping out ~$150 billion in market capitalization. The wave continued, dragging down the S&P 500 and Nasdaq indices.
The cryptocurrency market reacted particularly painfully. Bitcoin dropped below the $103,000 mark, dragging the entire market down with it. For the crypto community, which saw Musk as a 'godfather' and Trump as a new political patron, this conflict became a signal of total uncertainty.
Manipulation or just 'politics'?
And here arises the main question: is what is happening a cynical manipulation of the market? From a legal standpoint, proving this is practically impossible. For that, the SEC would need to find evidence of a secret conspiracy aimed at deceiving investors for profit. The scenario where Trump and Musk secretly agree to crash the markets to buy at the bottom is great for Hollywood, but in reality, their public conflict looks like a true battle of egos mixed with real business interests.
However, if we set aside legal casuistry, we are essentially witnessing manipulation in its purest form. Both participants are well aware that each of their words is a lever moving billions of dollars. This is a new form of power where the main tool of influence is not economic calculation, but media weight and cult of personality. It's no surprise that the internet exploded with conspiracy theories about a coordinated attack aimed at 'buying at the bottom' to quite justified accusations that two egotists are playing with the fates of millions of small investors for their own vanity.
What's next? Popcorn and risk hedging
In the dry residue, we have a classic example of how modern politics, transformed into a reality show, directly affects financial markets. The conflict between Trump and Musk is not just a quarrel. It is a powerful signal for all investors: in a world where personal grievances can crash markets in an instant, traditional analytical methods are becoming less effective.
For the crypto market, this is yet another reminder of its vulnerability. Until the industry gains a clear regulatory framework and sheds its excessive dependence on the moods of individual personalities, it will be thrown into turmoil by every loud tweet.
And for us, simple observers, there's nothing left but to stock up on popcorn and watch the development of this drama. And, of course, diversify our portfolios. Because when titans clash, the splinters fly in all directions. And it’s better if those splinters are not your savings.
