Last night, the cryptocurrency market experienced a shocking moment: influenced by the public confrontation between Musk and Trump on social media, Bitcoin (BTC) price sharply fell, briefly dropping below the $100,400 mark, a decline of more than 5% from the previous day’s peak. During the same period, Tesla's stock price plummeted by 14.26%, and the cryptocurrency market saw liquidation amounts reach $982 million in 24 hours, with over 90% (or $889 million) attributable to long liquidations, while short liquidations were only $92.75 million, making long investors the primary 'victims.'
Trigger for the Plunge: Political and business conflicts ignite market panic.
The core driving factor of this decline comes from black swan events in the political and business realm:
Escalating Conflicts: Musk and Trump have evolved from campaign allies to open enemies, with the former accusing the latter of being involved in the 'Epstein files' scandal, while the latter retaliates with cuts to corporate subsidies. Their mutual attacks on social platforms rapidly intensify market concerns over 'political uncertainty.'
Emotional Transmission: As the leading tech stock in the U.S., Tesla has a strong correlation with the cryptocurrency market (Musk has publicly influenced coin prices multiple times). Its stock price plummeting directly triggers crypto investors to sell off for safety, creating a 'U.S. stock decline → crypto market follows' linkage effect.
Market Fatigue: Multiple factors such as the stalemate in the trade war, the judiciary struggle, and the fulfillment of Circle's listing expectations have drained the market's bullish momentum, and this conflict has become the 'last straw' that breaks the camel's back.
Market Status: Short-term sentiment dominates; long-term structure remains intact.
Technical Observation: Although BTC is nearing the psychological threshold of $100,000, it has not effectively broken below the strong support range of $98,000 - $93,000 (where a large number of long-term holders' costs are concentrated). On-chain data shows that the Bitcoin turnover rate remains low, with early holders’ addresses maintaining stable holdings, and no large-scale panic selling has occurred; the inventory of coins on exchanges has not significantly increased, indicating that the market still harbors reluctance to sell.
Capital Dynamics: The total amount of funds in the market slightly increased by $2 billion to $253.2 billion. The market values of stablecoins like USDT and USDC increased by $113 million and $23 million respectively, reflecting a rising demand for capital safety. Trading volume has significantly expanded, but liquidity is low, and price rebounds mainly rely on reduced selling pressure rather than active buying. Market activity remains at a freezing point.
Sentiment Indicator: The Fear and Greed Index plummeted from 55 to 46, entering the 'fear zone.' Investors are highly cautious, and it is essential to be alert to the chain reaction triggered by further negative developments.
Market Outlook: Non-farm payroll data becomes a key variable; when will the bottom-fishing opportunity appear?
Short-term Risk Point: If the conflict between Musk and Trump continues to escalate, it could trigger turbulence in U.S. political and business relations, heightening market concerns about 'regulatory policy uncertainty,' and pushing BTC below $98,000.
Potential Positive: If tonight's non-farm payroll data meets expectations, it could alleviate U.S. stock investors' concerns about economic recession, indirectly boosting sentiment in the cryptocurrency market. Historical data shows that the 30-day correlation coefficient between U.S. stocks and the crypto market reached 0.68, indicating significant linkage effects.
Trading Strategy: Aggressive investors: Consider looking for opportunities to build positions in the $98,000 - $93,000 range in batches, with strict stop-loss settings (e.g., exit if it falls below $93,000). Conservative investors: Wait for the Fear and Greed Index to stabilize and rise, and for prices to stand firm at the key resistance level of $105,000 before considering entry, to avoid left-side trading risks.
Political Cycle and Cryptocurrency's 'Emotional Binding.'
This incident again confirms the 'high sensitivity' of the cryptocurrency market: in the absence of substantial value support, external factors such as celebrity statements and political-business battles can easily trigger short-term violent fluctuations. However, in the long term, Bitcoin has not broken below its long-term uptrend line, and fundamentals (like halving cycles and institutional holdings) have not fundamentally deteriorated; this decline is more likely a 'technically driven correction due to emotion' rather than a trend reversal.
Investors should remember: in a time when political and business black swan events are frequent, controlling positions, reducing leverage, and staying away from short-term speculation are essential to preserve strength amidst volatility.
