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Market Forces Behind Crypto’s Fall
The cryptocurrency market experienced a notable downturn on June 6, 2025, as the total market capitalization fell by approximately 2.30%, reaching $3.21 trillion. This decline is attributed to a combination of factors, including the escalating feud between former U.S. President Donald Trump and billionaire Elon Musk, significant liquidations in crypto futures, and a concerning technical breakdown in the overall market structure. This blog will unpack these elements in detail, explaining their impact on cryptocurrencies such as Bitcoin, Ethereum, and altcoins.
Trump-Musk Feud Sparks Sell-Off
The catalyst for the market drop appears to be the intensified public conflict between Donald Trump and Elon Musk. During the late trading hours on June 5, crypto prices began to fall following a heated online exchange between the two influential figures. Both had previously aligned in the 2024 U.S. Presidential election context, but recent events saw a sharp breakdown in their relationship.
Musk openly criticized Trump’s recent government spending bill — the so-called “Big Beautiful Bill” — and supported calls for Trump’s impeachment. In response, Trump attacked Musk’s economic stance, threatening to terminate government subsidies and contracts that benefit Musk, stating this move could save “billions and billions of dollars” for the U.S. government.
This political and economic spat triggered a risk-off sentiment among investors, causing many to reduce exposure to risk assets, including cryptocurrencies. The crypto market, known for its sensitivity to macroeconomic and geopolitical factors, quickly reacted to the uncertainty, accelerating sell-offs and increasing volatility.
Massive Liquidations Intensify Pressure
Another major contributor to the market decline was a wave of futures liquidations totaling nearly $980 million within a 24-hour period. Of this, long positions accounted for $874 million, marking the largest single-day long liquidation since February 25, 2025. Short liquidations were comparatively minimal at $105 million.
Liquidations occur when leveraged traders fail to maintain margin requirements, forcing exchanges to close their positions automatically. The overwhelming volume of long liquidations indicates that many bullish traders were caught off guard by the sudden price drops, leading to forced selling and exacerbating downward price pressure.
Bitcoin and Ethereum bore the brunt of these liquidations, with $342.9 million and $285 million respectively. Solana saw $50.3 million liquidated, while altcoins like Dogecoin and XRP had $27 million and $23 million liquidations respectively.
This domino effect not only drives prices lower but also creates panic among investors, amplifying selling momentum across the board. The futures market’s liquidations highlight the fragile nature of current crypto market sentiment, where leveraged positions can quickly unravel during periods of uncertainty.
Technical Breakdown Signals Further Risks
From a technical analysis perspective, the crypto market’s decline followed a critical breakdown of multi-week support around the $3.25 trillion market cap level. The combined valuation of all cryptocurrencies (commonly referred to as TOTAL) broke below this key support zone, indicating weakening momentum and increasing downside risks.
Currently, the market is retesting support near $3.12 trillion, where the 50-day and 200-day simple moving averages (SMAs) converge. This zone is critical because these moving averages often act as significant support or resistance levels for market prices. The last time TOTAL dipped below this level was on February 24, 2025, which triggered a massive 26% drop in crypto valuations.
If the market fails to hold above this critical level, it could set the stage for further declines, potentially pushing the total crypto market cap toward $2.9 trillion or even lower. This would have cascading effects across Bitcoin, Ethereum, and various altcoins, impacting investor confidence and triggering more liquidation events.
Conclusion: Navigating Crypto Market Volatility
The cryptocurrency market downturn on June 6, 2025, underscores the volatile and interconnected nature of this asset class. The combined effects of the Trump-Musk feud, a significant liquidation cascade, and technical breakdowns have shaken market sentiment and pressured prices downward.
For crypto investors, this event is a reminder of the importance of risk management and the influence of both macroeconomic and microeconomic factors on digital asset valuations. Traders should remain cautious, monitor key support levels, and be prepared for potential further volatility as political and technical factors continue to evolve.
Despite the short-term turmoil, the crypto market remains resilient over the long term, with innovative technologies and institutional interest continuing to drive adoption. Staying informed about market dynamics and geopolitical developments will be essential for navigating the unpredictable crypto landscape in 2025 and beyond.