The Chain Reaction of Musk and Trump's Feud in the Cryptocurrency Market:
I. The Intensification of Contradictions in the Industrial Roots and the Cryptocurrency Battlefield
In June 2025, the public conflict between Musk and Trump essentially reflects the collision of interests between the new energy industry and traditional political forces. Trump's push for the (Big and Beautiful Budget Act) to repeal tax credits for electric vehicles and cut green energy subsidies directly impacts Tesla's core interests, while Musk's exposure of procedural violations in the overnight passage of the bill further intensifies the conflict. This game reflects a deeper restructuring of power in the cryptocurrency space: the Trump administration attempts to consolidate digital financial discourse through the establishment of a Bitcoin strategic reserve (holding about 200,000 Bitcoins), while Musk's X Money plan aims to build a 'social-payment' ecosystem by integrating cryptocurrencies like Dogecoin, presenting a challenge to the traditional financial system.
It is worth noting that Trump's cryptocurrency policy exhibits contradictions driven by political donations. During the 2024 election period, he received over $120 million in political donations from the cryptocurrency industry, subsequently signing an executive order to establish a digital asset working group and promoting Bitcoin, XRP, and others into strategic reserves. However, the 'TRUMP' issued by his family business plunged 80% due to excessive speculation, exposing the deep binding of policy and personal interests. This characteristic of a 'policy market' was vividly demonstrated in March 2025: after Trump announced the inclusion of XRP, SOL, and others into reserves, the relevant cryptocurrencies surged over 50% in one day, but quickly retreated due to unclear details, highlighting market concerns about policy stability.
II. Three Major Risk Dimensions in the Cryptocurrency Market That Require Attention
1. The Huge Gap Between Policy Expectations and Reality
Although Trump's Bitcoin strategic reserve plan boosts market confidence in the short term, practical operations face multiple contradictions. First, the reserve is based on Bitcoin confiscated by the government, with no new purchases, leading to unmet expectations for capital injection, causing Bitcoin's price to drop by 5% after the policy announcement. Second, the legal status of the reserve is unclear, with the Federal Reserve publicly opposing 'the binding of monetary policy to crypto assets,' fearing that government intervention in coin prices could lead to controversy over 'being both the referee and the player.' Additionally, the cryptocurrency products from Trump family businesses (such as Truth Social Bitcoin ETF) pose risks of interest transfer, which may exacerbate market volatility.
2. The Escalation of the Game Between Technological Innovation and Regulatory Compliance
Musk's X Money plan promotes the mainstreaming of decentralized finance (DeFi) by integrating cryptocurrency payments. Currently, X Money has obtained money transmission licenses in 41 US states, covering over 80% of the US population, and plans to launch high-yield money market accounts by 2025. However, its expansion faces regulatory hurdles: New York has yet to approve the license, and Democratic Senator Elizabeth Warren criticized X Money for 'gathering users' personal financial data,' while the SEC's review of its compliance is progressing slowly. If X Money successfully expands its testing scope in 2025, cryptocurrencies supported by Musk, such as Dogecoin, may see increased liquidity, but regulatory uncertainty could become the biggest variable.
3. The Deep Division of Geopolitics and Market Structure
Trump's 'America First' policy is reshaping the global cryptocurrency landscape. On one hand, the cross-border digital currency recognition mechanism he promotes may create a 'dollar-cryptocurrency' dual-track system, while regulatory frameworks in places like Hong Kong and the EU emphasize compliance and risk control, leading to regional characteristics in the market. On the other hand, Trump's tariff policies have impacted the cryptocurrency supply chain: the import tariff on mining machines has increased to 36%, forcing US miners to consider relocating to Southeast Asia, threatening Bitcoin's hash rate security. This policy division may exacerbate the dual contradiction of cryptocurrencies as 'safe-haven assets' and 'risk assets,' significantly enhancing the correlation between Bitcoin prices and the US dollar index.
3. Reconstruction of Investment Strategies Under Market Differentiation
1. Risk Hedging for Policy-Sensitive Assets
Cryptocurrencies supported by Trump, such as Bitcoin and XRP, should be cautious of the pullback risk after 'expectation fulfillment.' For instance, in March 2025, Bitcoin's strategic reserve expectations pushed it to break $95,000, but it later fell back to $78,000 due to a lack of policy details. Investors can address volatility through options strategies (such as buying put options to hedge against downside risks) or cross-market arbitrage (such as exploiting price differences between the US and Asian markets). Additionally, cryptocurrencies associated with the Trump family (such as 'TRUMP' and WLFI Token) should have strict position limits due to high speculation.
2. Value Exploration of Technology-Driven Projects
If Musk's X Money ecosystem is successfully implemented, Dogecoin (DOGE) may transition from a meme coin to a practical token. The X Money plan supports Dogecoin as a payment tool, allowing creators to receive fan rewards directly through the platform, and merchants can instantly settle cryptocurrency income, significantly enhancing Dogecoin's liquidity. Additionally, X Money's integration of AI assistant Grok's intelligent analytical capabilities may give rise to new DeFi applications combining 'social + payment + data analysis', with related protocols (such as liquidity mining projects within the X platform) worthy of long-term attention.
3. Dual Guarantees of Compliance and Diversified Investment
In the face of regulatory uncertainty, investors should prioritize compliant exchanges (such as Coinbase and Kraken) and regulated cryptocurrency products (such as Bitcoin spot ETFs). At the same time, they need to pay attention to the policy dynamics of various countries: the US SEC's review of X Money, the implementation of the EU (Crypto Asset Market Regulation) (MiCA), and the cryptocurrency licensing system in Hong Kong, all of which may affect the market landscape. In terms of asset allocation, it is recommended to control the cryptocurrency proportion to 5%-10% of the investment portfolio and to diversify risks through cross-chain assets (such as Polygon and Solana) and stablecoins (such as USDC and BUSD).
IV. Seeking Certainty Amidst Policy Turbulence
The feud between Musk and Trump essentially represents the power struggle between technological capitalism and traditional political forces in the digital economy era. For the cryptocurrency market, this conflict brings both policy dividends (such as the US cryptocurrency strategic reserve) and exacerbates market vulnerabilities (such as the speculative bubble of TRUMP). Investors need to find a balance within the triangular framework of policy games, technological innovation, and regulatory compliance, focusing on the legislative process of Trump's tax reform bill, the progress of X Money's implementation, and the cryptocurrency regulatory dynamics in major global economies. In the context of increasing uncertainty, rational analysis, diversified investments, and strict risk control will become key strategies to navigate market cycles. In the future, the direction of the cryptocurrency market will depend on the dynamic balance between technological innovation and policy frameworks, and the game between Musk and Trump may just be the prologue to this transformation.