Crypto Markets Dip as Trump-Musk Feud and Recession Fears Weigh on Sentiment
Global crypto markets fell Friday as political tensions in the U.S. and fresh economic concerns triggered investor caution.
Dogecoin (DOGE) and Cardano (ADA) were hit hardest, falling 6.9% and 6.5% respectively, amid broader risk aversion. The declines followed an escalating dispute between former President Donald Trump and tech magnate Elon Musk, which added to ongoing worries over a potential U.S. recession.
Bitcoin (BTC) briefly dipped below $101,000 before stabilizing above $102,000 in early Asia trading. Other major cryptocurrencies, including Ethereum (ETH), BNB, XRP, and Solana (SOL), posted losses between 2% and 5%.
Tariff Warning Triggers Risk-Off Tone
Musk’s warning that Trump’s proposed tariffs could trigger a recession in the second half of 2025 sent shockwaves through markets. His post on social media platform X ignited fresh debate over the health of the U.S. economy and its potential impact on speculative assets like cryptocurrencies.
“The Trump tariffs will cause a recession in the second half of this year,” Musk wrote.
Analysts say the spat has injected a new layer of uncertainty into an already fragile macroeconomic environment.
“This type of political conflict can rattle markets and stall investor conviction,” said Jeff Mei, Chief Operating Officer at BTSE. “We’ve seen that play out with sharp drawdowns across crypto.”
Optimism Persists Amid Institutional Interest
Despite the turbulence, some experts remain optimistic about crypto’s longer-term outlook. Mei noted that institutional support appears resilient, highlighted by the strong debut of Circle (CRCL) shares earlier in the week.
Nick Ruck, director at LVRG Research, said the broader sell-off was more tied to headline risk than a shift in fundamentals.
“The ongoing Musk-Trump feud has created a temporary overhang,” Ruck told CoinDesk. “But we see continued structural growth in crypto adoption and infrastructure investment.”
Policy Watch: Markets Eye Debt Talks and Fiscal Reform
Looking ahead, traders are watching for clarity on the U.S. debt ceiling negotiations and the economic implications of Trump’s proposed “One Big Beautiful Act.” Both developments could have significant repercussions for market liquidity and investor sentiment.
For now, traders remain cautious as geopolitical and fiscal uncertainties continue to drive market direction.
