The overall crypto market capitalization fell by about $170 billion to $3.26 trillion on June 5, the lowest level since May 8. Markets appear poised for a further decline below long-term levels if current supports fail.
The sharp decline appears to be partly caused by the bitter clash between US President Donald Trump and tech billionaire Elon Musk , a clash that has led to a full-blown rift between the two as well as the exchange of accusations on social media.
Donald vs. Elon. Who will win?
The rift came to a head yesterday – June 5 – when Trump, during a meeting at the White House with the German Chancellor, expressed his displeasure with Musk , who until recently had been one of his most trusted advisors.
“I am very disappointed in Elon, who I have helped a lot in these months,” Trump said.
Musk wasted no time in responding. In a direct post to X, he accused Trump of ingratitude and replied: “Without me, Trump would have lost the election.”
The exchange marked the dramatic dissolution of their once-solid alliance, forged during Trump's second term.
Musk's dig at Trump fuels market volatility
Tensions escalated further when Musk responded “Yes” to a post on X calling for Trump’s impeachment. The comment immediately attracted attention, even though any such attempt is considered politically impossible, given that Republicans currently hold majorities in both houses of Congress.
Elon Musk has not held back and his X account is particularly hot these days, with the US president the target of his arrows. The Tesla CEO has declared that the tariffs imposed by Trump “will cause a recession in the second half of this year” and that “Congress is bankrupting America!”
And also…
“In light of the President’s statements regarding the cancellation of my government contracts, SpaceX will immediately begin the process of decommissioning the Dragon spacecraft.”
In light of the President's statement about cancellation of my government contracts, @SpaceX will begin decommissioning its Dragon spacecraft immediately pic.twitter.com/NG9sijjkgW
— Elon Musk (@elonmusk) June 5, 2025
For over a week, Elon Musk has been harshly criticizing Trump's signature bill, called the One Big Beautiful Bill .
“It doesn’t bother me that Elon turned on me, but he should have done it months ago. This is one of the greatest bills ever introduced in Congress,” Trump said on Truth Social.
However, the visibly irritated Tesla CEO didn’t stop there, telling X that it’s “time to drop the real bombshell: Donald Trump is in the Epstein files. That’s the real reason they haven’t been made public. Have a great day, DJT!”
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The implications for crypto markets
Markets quickly reflected the tension. Bitcoin fell to $100,783 on Thursday before recovering. It is currently trading at $103,470, up 1.83%.
But over the past 24 hours, more than $324 million in long Bitcoin positions have been liquidated, according to data from Coinglass . And the broader crypto market is down nearly 5% over the same period. Meme coin $TRUMP , which had surged during the height of their alliance, is down 10%.
Analysts point out that Elon Musk's influence in the cryptocurrency sector is a determining factor in the market dynamics, given his ability to move sentiments and investment decisions with simple statements or actions. However, this influence is part of a highly uncertain political context, which further amplifies the already intrinsic volatility of the market.
This combination of factors has generated a new wave of instability, with sharper price swings and increased caution among investors, who find themselves navigating not only the normal fluctuations of an emerging sector, but also the repercussions of unpredictable and often controversial political events.
Tesla Collapses as Trump Rift Threatens Federal Support
Tesla shares , meanwhile, have taken a sharper hit. The stock ended yesterday down 14% and has fallen 16% since Musk began attacking Trump’s domestic policy bill last week.
It is currently trading about 33% below where it was on the day Trump took office, signaling growing concerns that the feud could jeopardize billions in federal subsidies and contracts vital to Tesla’s long-term prospects.
Until recently, Musk had been a key informal adviser to Trump, helping shape major policy decisions and frequently representing the administration abroad. His sudden exit from that inner circle has left a noticeable void in the alignment on technology policy, with markets now unsure how the administration will proceed on key issues like electric vehicles and space infrastructure.
Adding to the uncertainty, Musk has hinted at the idea of launching a new political movement. That possibility, along with the risk of a regulatory reversal or funding cut, has investors bracing for a more hostile environment. And that’s not just true for Tesla, but for the broader tech and crypto sectors, which have often moved in tandem with Musk’s influence.
The clash has become more than just a political fringe event . It is a rare case of personality-driven politics colliding with market fundamentals.
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