The feud between Elon Musk and former President Donald Trump has crossed political boundaries, starting to cause real impacts on the financial market. Tesla's stock is plummeting, Bitcoin's price is fluctuating – all of which is causing both traditional and cryptocurrency investors to become concerned.
Tesla's stock has plummeted sharply after the political confrontation.
After Elon Musk publicly criticized Trump's $5 trillion spending bill in June and launched a new political party called America Party, Tesla's stock dropped by up to 14%. On July 7 alone, the stock fell an additional 6.8%, erasing $79 billion in market capitalization.
The more concerning issue is what will happen next. With the Republican Party controlling all three branches of the U.S. government, investors fear that Tesla could lose government incentives, especially the electric vehicle support policy. Not only Tesla, but SpaceX – a company dependent on $22 billion in federal contracts – could also face similar risks if the Trump administration retaliates.
Tesla's Bitcoin becomes a 'ticking time bomb'.
Tesla currently holds 11,509 BTC, which was once valued at about $1.2 billion. However, with Bitcoin’s recent 12% drop, this asset is now worth around $951 million. If Tesla's stock continues to plummet, Musk may be forced to sell part of the company's Bitcoin to raise capital – an action that could cause a domino effect, adding further instability to the cryptocurrency market.
How can Tesla shake the Bitcoin market?
Starting in 2025, under new regulations from the Financial Accounting Standards Board (FASB), Tesla must disclose the market value of Bitcoin every quarter. In the first quarter of 2025, when Bitcoin's price drops to $93,000, Tesla reports significant losses. Conversely, in Q4/2024, when Bitcoin hits $106,000, the company reports an additional profit of $600 million.
Now, in the context of falling stocks and a worried market, all eyes are on Musk's next decision. If he chooses to sell BTC, this could cause a shock in the cryptocurrency market. But if he firmly holds on, it could be a stabilizing signal to reassure investors.
What do experts say?
Cryptocurrency analyst Nic Puckrin believes that the confrontation between Musk and Trump was anticipated, but the media influence of both is increasing instability. If tensions escalate, the impact on the market will be even more severe.
Meanwhile, investor Anthony Pompliano suggests that Musk may use Tesla's Bitcoin as a financial shield against Trump's potential cuts to electric vehicle subsidies. He believes that Musk's America Party has a pro-Bitcoin ideology, and Tesla is likely to hold or even increase its Bitcoin holdings to ensure financial stability amidst escalating tensions.
Business is paramount? Tesla's future is under threat.
While Musk is focusing on politics, Tesla is rolling out robotaxi services in Austin, while facing strong competition from China's BYD. Many investors believe Musk should concentrate on business strategy and technology instead of being distracted by politics.
While projects like SpaceX's Mars mission and xAI's AI are not affected by the stock market, Tesla – a public company – is different. Tesla's management continues to support Musk, but they may likely ask him to refocus on business operations and find ways to ease relations with the Trump administration.
In short: Musk's next decision will have a significant impact.
If Musk decides to keep Tesla's Bitcoin, the cryptocurrency market may stabilize again. But if he is forced to sell, it could create a wave of sell-offs, driving Bitcoin's price down. As Tesla's fate is closely tied to Elon Musk's political moves, both traditional investors and those in cryptocurrency will continue to watch his every move.
