Often the very slightest hint of criticism from Elon Musk towards Donald Trump can send mild shockwaves throughout the cryptocurrency market. Consequently, all digital assets witnessed huge depreciations in price. Bitcoin, Dogecoin, and the $TRUMP meme coin each saw substantial drops, contributing to a broader market downturn and highlighting the sensitivity of the crypto space to high-profile public disputes. The battle has supercharged, with Elon Musk’s ice-cold criticism fueling the fire. This chaos has led to a massive bear market and increased overall volatility in the crypto space.
Bitcoin’s price decreased by 4% in an immediate response to each Musk-Trump break launch, a strong indicator of overall market risk aversion. After 90% declines, a reviving Dogecoin saw an explosion. The widely popular cryptocurrency, which has been subject to huge fluctuations based on Elon Musk’s Twitter feed, fell as much as 6.3% – 10%. The $TRUMP meme coin took a hit too, with its value falling by more than 10% during the dark mood.
The move sent ripples through the broader cryptocurrency market as well, contributing to a market-wide bloodbath of 5% or more. This crash liquidated close to $1 billion worth of leveraged positions. It underscores the high-stakes nature of crypto trading and the danger of sudden, substantial losses during volatile market conditions. The CoinDesk 20 Index, which tracks the overall performance of the digital asset market, dropped over 5%. This decline was a result of the long-standing public battle and heightened volatility in the crypto markets.
Immediately following the war, Dogecoin suffered, falling 7.9%. Ethereum didn’t miss out on the fun, down 6.6% as well as Bitcoin beating a hasty retreat of 2.4%. These movements highlight how quickly market sentiment can shift in response to external events and influential figures' opinions. Dogecoin went bananas on Elon Musk’s remarks. From one day to the next it fell by nearly 10 percent and within a week it had lost 22 percent of its value.
Despite Bitcoin seeing drastic declines in value, it held up better than most other assets. It fell under $101,000, a decline of 4%. Meme coins such as Dogecoin and $TRUMP suffered excessively larger losses, as Dogecoin fell 6.3% and $TRUMP more than 10%. This divergence is representative of the fact that speculative assets are more susceptible to adverse media narratives. Assets that place a disproportionate faith in FOMO are particularly susceptible.
Elon Musk's social media posts and public pronouncements have a documented history of causing sharp movements in Dogecoin and other related assets. His recent criticism of Donald Trump is part of a very transparent pattern. It does highlight the amount of power influencers like big tech CEOs can wield over the cryptocurrency market. Investors are understandably leery of more price fluctuations caused by Elon Musk’s sustained onslaught.
The market’s reaction only illustrates how closely linked the values of cryptocurrency and the public mood are. Events such as the Musk-Trump feud serve as reminders of the importance of staying informed and exercising caution when navigating the digital asset landscape. The entire cryptocurrency market capitalization fell by 5.1% over this period of geopolitical unrest.
Bitcoin’s crash, while dramatic, is a sign of a maturing and risk-averse investor. Millions more view the cryptocurrency market through the lens of high risk, high reward speculation. As uncertainty grows, investors panic and move their capital to safer assets, which is putting downward pressure on crypto prices. This is especially true when volatility runs high, as has been the case since the onset of the Musk-Trump spat.
That uneven impact, especially as it relates to meme coins such as Dogecoin and $TRUMP, demonstrates how speculative many of these assets are. Meme coins are extremely different from established cryptocurrencies such as Bitcoin and Ethereum. They have weak fundamentals and are fueled largely by social media hype and the overall mood of the community. This leaves them much more susceptible to sudden price fluctuations. These oscillations are mostly a result of external catalysts—mainly news developments or changes in overall investor psychology.
