Trump-Musk Twitter Clash Triggers 5% Crypto Sell-Off

In a dramatic turn of events, a late-night Twitter exchange between President Donald Trump and Elon Musk sent shockwaves through global markets, causing a significant drop in major cryptocurrencies and resulting in nearly $1 billion in liquidated leveraged bets. Bitcoin, the leading cryptocurrency, plummeted below $101,000 overnight before making a modest recovery. Other cryptocurrencies such as Dogecoin and Cardano were also severely impacted, each falling by over 6% within a 24-hour period. The CoinDesk 20 Index, which monitors the largest crypto assets, experienced a decline of over 5%.

According to data from CoinGlass, traders faced substantial losses amounting to $988 million in liquidations, with $888 million of these losses coming from long positions. This indicates a widespread wipeout of bullish positions. Exchanges like Bybit and Binance were particularly hard hit, with Bybit alone accounting for nearly $354 million in liquidations. Bitcoin was the most affected, with over $342 million in liquidations within the past 24 hours. Ether followed closely with $286 million in liquidations, reflecting the broader market sell-off. Other tokens such as Solana and Dogecoin also saw significant liquidations, with $51 million and $27 million respectively. XRP was not spared either, with $23 million in positions wiped out. High-leverage plays on memecoins, such as 1000PEPE, also contributed to the volatility as traders rushed to exit their positions.

Liquidations occur when a trader's leveraged position is forcibly closed because they can no longer meet the margin requirements. This typically happens when the price of the underlying asset moves against their position, leading to substantial or total loss of their initial investment. A cascade of liquidations often signals market extremes, where a price reversal could be imminent as market sentiment overshoots in one direction. The sell-off comes as Trump accused Musk of going “crazy” and threatened to terminate government contracts with his companies, while Musk retaliated by linking Trump to Jeffrey Epstein’s files. This clash overshadowed what had been a mostly bullish trend for crypto markets in recent weeks, intensifying a profit-taking bout from the start of this week.