Trump–Musk Fallout Shakes Crypto and Tesla Stocks

A public feud between Donald Trump and Elon Musk has triggered a sharp downturn in both the crypto market and Tesla shares, raising investor fears over political risk.

The once-powerful alliance between Donald Trump and Elon Musk has unraveled in dramatic fashion, sending shockwaves across financial markets. In the wake of their clash, Tesla stock plunged 14%, and Bitcoin briefly dipped to $100,783, underscoring how personality-driven politics can destabilize market fundamentals.

The rift exploded into public view on June 5, during a high-profile White House meeting with German Chancellor. When asked about Musk, Trump declared, “I’m very disappointed in Elon. I’ve helped Elon a lot.” The comment marked a clear break from a relationship that, until recently, was a cornerstone of Trump’s second-term tech policy strategy.

Musk wasted no time responding. In a pointed post on X, he wrote: “Without me, Trump would have lost the election.” The statement highlighted Musk’s growing political ambitions and added fuel to what was already a volatile trading environment.

Political Rift Sparks Market Turmoil

The fallout from the Trump–Musk spat extended swiftly into the financial realm, especially in the crypto and tech sectors where both figures wield substantial influence.

Bitcoin, already in a fragile position amid macroeconomic uncertainty, dropped to $100,783 on Thursday before bouncing back above $102,700. According to Coinglass, over $324 million in Bitcoin long positions were liquidated in just 24 hours, as investors scrambled to adjust to the rapidly shifting sentiment.

The broader crypto market wasn’t spared, with a nearly 5% decline across major tokens. The $TRUMP meme coin, which had surged in value during the peak of Trump and Musk’s political camaraderie, fell by 10%, mirroring the mood of the markets.

Analysts point to Musk’s outsized influence in the crypto space—both as a market mover and a cultural icon. His falling out with the White House adds a new layer of political instability at a time when regulatory uncertainty and economic headwinds already weigh heavily on the sector.

Tesla Tanks on Fears of Losing Federal Backing

Tesla’s decline was even steeper. Following Musk’s criticism of Trump’s domestic policy bill last week, Tesla shares have dropped 16%, including a sharp 14% fall on Thursday alone. The stock now sits 33% below its price on Inauguration Day, signaling deep investor concern that Musk’s feud with Trump could cost the automaker crucial federal support.

As one of the largest beneficiaries of U.S. electric vehicle subsidies and government contracts, Tesla’s business model is tightly intertwined with federal policy. Musk’s now-severed role as an informal adviser to Trump once gave the company strategic influence over regulation and funding priorities.

That influence is now in doubt. The uncertainty around Tesla’s future access to federal subsidies—especially in areas like EV infrastructure and space technology—has prompted a reassessment of its valuation.

Key factors behind Tesla’s sharp decline:

• Political backlash risk: The feud could affect Tesla’s eligibility for future subsidies and contracts.
• Investor uncertainty: Markets are unsure how Trump’s administration will now shape tech policy without Musk’s involvement.
• Leadership volatility: Musk’s unpredictable political moves raise concerns about his priorities and Tesla’s strategic focus.

Musk’s Impeachment Comment Adds Fuel to the Fire

The situation intensified when Musk replied “Yes” to a post on X suggesting Trump should be impeached. Although such a move is politically unfeasible—Republicans currently control both chambers of Congress—the remark sparked fresh headlines and further unsettled markets.

It also signaled Musk’s growing willingness to challenge Trump publicly and politically. Some insiders speculate he may be considering launching a new political movement. While details remain unclear, even the hint of a new faction led by Musk introduces more complexity into an already polarized U.S. political landscape.

If Musk does pursue a political venture, it could further strain his relationship with the federal government and divert his attention from core business operations, including Tesla, SpaceX, and his growing involvement in AI.

Tech and Crypto in the Crossfire

The Trump–Musk fallout has raised broader concerns about how political drama can upend investor confidence, especially in sectors where public perception and regulatory alignment are critical.

For the crypto industry, which has frequently mirrored Musk’s sentiment on platforms like X, the episode is a stark reminder of its sensitivity to political and personality-driven events. A single tweet from Musk has often been enough to send prices soaring—or plummeting.

In Tesla’s case, the loss of insider influence could leave the company vulnerable to policy shifts or a more hostile regulatory environment. If federal funding or incentives dry up, the consequences for Tesla’s long-term R&D and production targets could be significant.

Markets Brace for Prolonged Volatility

While the clash between Trump and Musk may appear like a political soap opera, its effects on financial markets are very real. The sharp drop in Tesla’s stock and the broad crypto market retreat reveal a deepening concern among investors that the feud could mark the start of more confrontational policymaking—especially against companies or sectors tied to Musk.

As analysts weigh the potential fallout, one thing is clear: when politics and personal rivalries collide with economic fundamentals, markets can become collateral damage. With both Trump and Musk remaining central figures on the national stage, investors are bracing for more volatility ahead.

For now, the Trump–Musk rift has not only fractured a powerful alliance but also sent a chilling message across Wall Street—when personalities drive policy, expect the unexpected.