Macroeconomic Interpretation: Last night, the public dispute between Trump and Musk on social media instantly ignited a powder keg in the financial markets. Tesla's stock price faced an epic sell-off, with a single-day market value evaporating by over $150 billion, and panic sentiment quickly spread to the U.S. stock market, simultaneously triggering a crash in the crypto market, with prices plummeting close to the psychological barrier of $100,000, leading to over 5% losses within 24 hours, and nearly $1 billion in contracts forced to close. This market tsunami triggered by personal statements starkly exposed the extreme sensitivity of crypto assets to political risk.
Interestingly, the roots of this storm have long been laid. Musk has recently been continuously attacking the U.S. debt crisis, stating that "national bankruptcy will make everything irrelevant." His call for both parties to stop internal strife and solve the deficit issue stands in stark contrast to Trump's push for tariff policies. Moreover, the latest statements from Federal Reserve officials add to the gloom—Governor Kugler and Kansas Fed President Schmidt both emphasized that inflation remains a serious concern, and high interest rates will be maintained for the long term. Schmidt further warned that "tariffs may continue to push prices higher in the coming months," suggesting that policymakers have been shackled by the specter of inflation.
The market's nerves were slightly eased this afternoon due to a piece of news: Musk accepted peace proposals, and Trump stated he would arrange a call. Tesla rebounded 5% in pre-market trading, and U.S. stock futures turned positive. However, the crisis revealed by deeper data has not dissipated. CoinAnk data shows that institutional investors' exposure to Bitcoin plummeted by 23% in the first quarter, with an outflow of $6.2 billion. Some institutions believe that Bitcoin's upward momentum has significantly weakened, and cracks have already appeared in U.S. economic data. When the market discovered the positive news of Trump’s media group submitting a Bitcoin ETF application (code-named DJT), it was difficult to offset the macro gloom, prompting investors to vote with their feet—Polymarket shows that the probability of "Trump being impeached within the year" has quietly risen to 10%.
Currently, the crypto market is facing a policy prisoner’s dilemma, as the Federal Reserve is caught between persistent inflation and economic slowdown, with expectations for interest rate cuts being continuously postponed. Trump's push for tariff policies is like a double-edged sword, potentially reshaping trade patterns while also reigniting the inflation engine. Additionally, there is a migration of funds seeking safety: institutional money is quietly shifting. Data shows that the myth of fund inflows into Bitcoin ETFs has shattered, with corporate treasury allocations replacing short-term arbitrage as the new main line, reflecting the cautiousness of smart money towards volatility. Leverage risks have also emerged, as Bitcoin's single-day volatility exceeded $5,000, with on-chain data showing liquidation amounts soaring to multi-month highs. High leverage in the face of political black swans can quickly turn from a profit tool into a self-destructive fuse.
Today, the market holds its breath for U.S. non-farm payroll data, which may become a short-term sentiment turning point. But a deeper warning has already emerged: when Bitcoin can be easily shaken by a 10% market value due to the verbal sparring between Trump and Musk, and when institutional funds collectively retreat due to policy uncertainty, the narrative foundation of crypto assets' so-called "safe-haven attributes" is starting to shake. In the tug-of-war between traditional financial giants and political forces, cryptocurrencies remain the most vulnerable pawn—this market earthquake triggered by a reality-show-like conflict merely reveals a corner of the risk iceberg.
BTC Data Analysis:
According to CoinAnk data, institutional investors' allocation to Bitcoin significantly contracted in the first quarter of 2025, decreasing by $6.2 billion compared to the previous quarter, a drop of 23%, marking the first quarterly decline since the launch of the U.S. spot Bitcoin ETF. Market dynamics indicate that this capital withdrawal is the result of a combination of price corrections and long-term holders cashing out. Notably, the growth momentum in the previous quarter primarily stemmed from listed companies incorporating Bitcoin into their balance sheet allocations, rather than professional asset management institutions through ETF channels, reflecting a characteristic shift in market participants from short-term arbitrage to strategic reserves.
In-depth analysis shows that this capital outflow is closely related to the dramatic macroeconomic environment. In early 2025, Bitcoin faced multiple pressures: concerns about the economy triggered by Trump’s tariff policies, the $1.5 billion hacking incident at Bitget exchange impacting market confidence, and large-scale unwinding of "cash arbitrage" trades, all triggering historic outflows from ETFs. Despite short-term volatility being intense, structural changes still show positive signals—during the quarter, the number of institutions holding Bitcoin ETFs increased by 30% against the trend, indicating that the long-term allocation logic has not fundamentally wavered. From a market impact perspective, as a compliant channel for traditional capital to enter, ETF fund flows have formed a strong correlation with Bitcoin prices; this adjustment, while exacerbating short-term volatility, may promote the establishment of a healthier value discovery mechanism in the market. Historical experience shows that institutional funds often flow back in a more sustainable manner after market consolidation.