Crypto Market Cap Drops 2.51% Amid Political Tensions and Musk-Trump Rift

The cryptocurrency market began the second half of 2025 on a rocky note, with significant declines driven by political tensions in the Middle East and the ongoing rift between Elon Musk and Donald Trump. On July 1, the total altcoin market cap fell below $1.30 trillion, dropping to $1.29 trillion. The broader market shed 2.51% in value over the same 24-hour period, lowering the global crypto market cap to $3.41 trillion. Altcoins, in particular, have been underperforming significantly against Bitcoin, recording weeks of sustained weak movements in their technical setup.

According to Michael Van de Poppe, founder of MN Capital, altcoins are in their deepest slump against Bitcoin in over two years. He shared a chart on X that showed the last comparable bottom formations occurred in June 2022 and June 2023, both of which marked significant lows in Ethereum and other altcoin valuations. The percentage of crypto assets (excluding stablecoins) outperforming Bitcoin over a rolling 90-day period has plunged to just 8%, near the lowest level seen in five years. Historically, this percentage has hovered around 60-80% during typical altcoin seasons, but current metrics are one of the worst on record.

Major altcoins have shown little sign of reversing course towards the upper side, with Ethereum, XRP, and Solana all facing technical barriers. Ethereum is currently trading just under the $2,500 mark, showing constrained movement and low volatility. It has encountered multiple obstacles after recovering from a Fibonacci support range between $2,100 and $2,200. Solana is now retesting a support zone between $143 and $149. Its prior golden cross helped sustain a small uptrend, but the next few sessions will determine if the token rebounds toward the $300 mark or drops toward $132 or lower.

The crypto market slump comes amid the “second round” of political disputes between President Donald Trump and Tesla CEO Elon Musk. After the two most-watched American personalities went neck and neck on social media at the start of June, they are back at it again. In the early hours of Tuesday, Musk bashed senators who voted in favor of Trump’s tax and spending “big, beautiful bill,” saying “they should hang their heads in shame.” Musk stated on X, threatening to publish posters labeling them “liars” and accusing them of raising US debt by $5 trillion. President Trump hit back on Truth Social shortly, propounding that Musk had received more subsidies than any individual in US government history. “Without subsidies, Elon would probably have to close up shop and head back home to South Africa,” Trump stated. “No more Rocket launches, Satellites, or Electric Car Production, and our Country would save a FORTUNE.”

The political landscape played a pivotal role in shaping market sentiment. Rising tensions between major global powers created an atmosphere of uncertainty, leading investors to adopt a more cautious approach. This cautiousness was further exacerbated by the ongoing rift between Elon Musk and Donald Trump, which added an additional layer of complexity to the market dynamics. Musk's influence as a prominent figure in the tech industry and his past involvement in the cryptocurrency space made his statements and actions particularly impactful.

The market's reaction to these developments was swift and pronounced. Bitcoin, the leading cryptocurrency, saw its price dip as investors sought to mitigate risks associated with the heightened political tensions. Ethereum and Solana, two other major players in the crypto space, also experienced significant price fluctuations, reflecting the broader market sentiment. The uncertainty surrounding the political climate and the Musk-Trump rift led to a general sense of unease among investors, who were wary of making large investments in the face of such volatility.

Despite the challenges, some analysts remained optimistic about the long-term prospects of the cryptocurrency market. Bitwise, a prominent investment firm, maintained its target price for Bitcoin at $200,000 by 2025, although it expressed skepticism about the ability of Ethereum and Solana to reach new highs in the near future. This optimism was tempered by the recognition that the market would need to navigate through the current period of uncertainty before it could stabilize and resume its upward trajectory.

The impact of political tensions and high-profile rifts on the cryptocurrency market underscored the need for investors to stay informed and adaptable. As the second half of 2025 unfolded, the market would continue to face challenges, but it also presented opportunities for those willing to take calculated risks. The resilience of the cryptocurrency market in the face of adversity was a testament to its growing maturity and the increasing acceptance of digital assets as a viable investment option.