A crypto crash affecting Bitcoin and altcoins is underway. Bitcoin price plunged to $100,000, erasing some of the recent gains it made when it surged to a record high in May. Other altcoins like Livepeer, Zebec Network, and Kekius Maximus plunged by double digits.
Why the Crypto Crash is Happening
There are three primary reasons why Bitcoin and altcoins are experiencing a decline. First, they are reacting to the ongoing fallout between President Donald Trump and Elon Musk, the world’s richest person.
Musk, who spent a fortune to get Trump elected, has been critical of some of Trump’s policies. He criticized his trade war, and is now urging Congress to vote “no” on Trump’s spending package known as the Big Beautiful Bill.
The bill slashes electric vehicle subsidies, which will directly impact Musk. It also boosts the US deficit and debt, undercutting the work Elon Musk did as the head of the Department of Government Efficiency (DOGE).
The Trump-Musk fallout led to Tesla shares plunging by over 14%. Crypto prices fell as investor sentiment worsened.
READ MORE: What is the best MSTR stock ETF between MSTY, MSTU, and MSTX?
Profit-Taking Among Investors
Bitcoin and altcoins are declining due to ongoing profit-taking among investors following the recent surge. Bitcoin price recently jumped to a record high of $111,900, up by over 50% from its lowest point in April. Similarly, most altcoins, especially meme coins, rose by triple digits.
It is normal for Bitcoin and other altcoins to drop sharply after hitting a key resistance level. For example, Bitcoin price initially jumped to a new high of $109,300 in January, and then it plunged to $74,300 in April. This means that these tokens will ultimately bounce back.
Seasonality Contributed to the Crypto Market Crash
Furthermore, Bitcoin and altcoins crashed due to seasonality, as June is typically one of the worst months for the crypto market. Bitcoin has averaged a return of minus 0.50% in June since 2013, while Ethereum has dropped by over 7%.
These coins drop in June because it marks the start of the summer season, when many investors travel. As such, the new crypto winter may go on until the third quarter if history repeats itself.
Trump and Xi Jinping Phone Call
The other main reason why Bitcoin and most altcoins are declining is that Trump had a phone call with Xi Jinping to address emerging trade issues.
This call aimed to soothe relations between the two countries, as the recent trade deal appeared to be facing challenges.
While the call was important, it did not yield any major outcomes, as the two parties pledged to continue talking. The primary concern is that the trade war may escalate, triggering fear among market participants, which could negatively impact stock and cryptocurrency prices.
READ MORE: Cardano Price Prediction: Top 4 Reasons to Sell ADA Today
