Bitcoin Drops 1.50% as Stock Market Cools, Tesla Falls 5.15%

After reaching multiple all-time highs, the heated stock market finally cooled, and Bitcoin followed suit. The S&P 500 and Nasdaq both fell 0.36% and 1.10% respectively, while Bitcoin, which had been relatively stable for over a week, dipped 1.50%. The Dow was the sole exception, climbing 0.72% to reach 44,410.13 points, still over 600 points below its December 2024 record of more than 45,000 points.

Tesla led the stock market’s downward slide, tumbling 5.15% after U.S. President Donald Trump criticized the company’s CEO Elon Musk and the government subsidies Tesla has received. Trump's post on Truth Social highlighted the potential financial burden of subsidies on Tesla, suggesting that without them, the company might struggle. This marked a significant shift in the relationship between Trump and Musk, who had previously criticized Trump's budget bill for increasing the national debt.

Bitcoin’s price fluctuated between $105,689.17 and $107,855.98 in the last 24 hours and is currently trading at $106,002.05, down 1.50%. The cryptocurrency remains up slightly by 0.56% over a seven-day period. The value of open futures contracts fell 2.78% to $69.92 billion, indicating a decrease in speculative appetite. Coinglass data shows $60 million in total liquidations over the past 24 hours, with the bulk of liquidations, or $55.08 million, coming from long positions while bearish short sellers had $4.93 million liquidated.

US stocks experienced a mixed performance on Tuesday, with investors closely monitoring developments in trade talks and the progress of President Trump's budget bill in the Senate. Following a series of record-highs set during the past week, the S&P 500 index took a pause as sellers entered the market. This pullback was accompanied by a decline in Bitcoin, which slipped 1.2% in early trading. Crypto-related stocks also felt the impact, with Coinbase and Strategy falling more than 2% and more than 1%, respectively.

The rally that had driven stocks to all-time highs began to lose momentum as bond yields rose. This shift was influenced by an unexpected increase in job openings, which dimmed the outlook for the Federal Reserve's monetary policy. The cooling-off period in the crypto market further contributed to the overall market sentiment, with Bitcoin struggling at key support levels.

The decline in Bitcoin and crypto-related stocks can be attributed to the broader market sentiment, which was influenced by the pullback in the S&P 500 index and the rise in bond yields. The unexpected increase in job openings suggested a stronger labor market, which could lead to higher interest rates and potentially dampen economic growth. This, in turn, could negatively impact the performance of riskier assets, including cryptocurrencies and crypto-related stocks.

The decline in Bitcoin and crypto-related stocks also reflects the growing correlation between traditional financial markets and the crypto market. As investors become more aware of the potential risks and rewards associated with cryptocurrencies, they are increasingly treating them as part of their broader investment portfolios. This means that movements in traditional financial markets, such as the S&P 500 index, can have a significant impact on the performance of cryptocurrencies and crypto-related stocks.

The recent decline in Bitcoin and crypto-related stocks serves as a reminder of the volatility and uncertainty that characterize the crypto market. While cryptocurrencies have the potential to generate significant returns, they are also subject to sharp price swings and market corrections. Investors should therefore approach the crypto market with caution and be prepared for the possibility of significant price fluctuations.