When Musk announced the establishment of the 'American Party' in a tech mogul manner on social media, the ripples of this political game quickly spread, dragging the cryptocurrency circle into unprecedented turmoil.
The emergence of Musk's 'American Party' seems sudden, but it actually harbors profound internal contradictions. He advocates for 'fiscal conservatism + investment in future industries,' which sharply conflicts with the 'Big and Beautiful' bill signed by Trump. This bill has pushed the fiscal deficit higher and cut clean energy subsidies, directly impacting Musk's industries that rely on government subsidies, and Bitcoin mining operations are also facing environmental scrutiny due to high energy consumption. If the 'fiscal tightening' forces that Musk promotes come to power, the policy supports that the crypto space has relied on, such as electricity subsidies and tax incentives, may collapse entirely, depriving the crypto space of crucial survival soil. Moreover, the clause in the 'American Party' program about using AI and blockchain to reshape electoral transparency is seen by Wall Street as a declaration of war against the traditional financial system. Once a third-party force rises, if the Federal Reserve ends its rate hiking cycle prematurely, the logic of Bitcoin as an 'anti-inflation asset' will be overturned, and the foundational value of the cryptocurrency space will be shaken.
Trump's counterattack against Musk has further spread panic in the cryptocurrency circle. First, White House officials hinted at reviewing SpaceX's government contracts and reassessing Tesla's autonomous driving safety certification. Subsequently, Trump openly incited at a rally that 'Musk should be sent back to South Africa.' This series of actions led to a sharp drop in Tesla's stock price, and Bitcoin also fell below a key support level. The outflow of stablecoins from exchanges like Binance and Coinbase surged, with a large amount of funds shifting to safe-haven assets. The cryptocurrency payment function of Musk's X platform was also suspended due to political risks, severely damaging the trading and payment system in the crypto space, and market confidence was significantly undermined.
Wall Street plays a key role in this political dispute. Morgan Stanley pointed out that if the 'American Party' rises in the upcoming elections, the cryptocurrency space will face three major deadly risks: a regulatory storm, tax cuts, and ETF withdrawals. Currently, the crypto market has fallen into a 'death spiral,' with Bitcoin miners forced to sell their holdings to repay debts due to high electricity costs, the Meme coin sector shrinking significantly, and retail leverage positions continuously being liquidated. Technically, Bitcoin has formed a 'head and shoulders' pattern on the weekly chart. If it breaks the key neckline, it could very well repeat the 'LUNA collapse' style drop seen in 2022, putting the entire cryptocurrency space in jeopardy.
However, in this dual strangulation of politics and finance, the cryptocurrency space is not without vitality. Areas such as censorship-resistant public chains, decentralized storage, and political hedging tokens are quietly becoming the direction for institutional investors, bringing a glimmer of hope to the crypto market.
The 'party-building battle' between Musk and Trump is no longer a simple political farce, but the ultimate judgment of the fate of cryptocurrency by tech capital versus traditional power. The cryptocurrency space is at a turning point of life and death in the summer of 2025, with the future filled with uncertainty.