Bitcoin, Ethereum, XRP slides as Elon Musk and Trump clash over "One Big Beautiful Bill"

Bitcoin (BTC) dropped 3% on Thursday after Tesla CEO Elon Musk and US President Donald Trump engaged in a war of words over the One Big Beautiful Bill Act. The risk-off sentiment following the clash also saw altcoins, including Ethereum (ETH), XRP and Solana (SOL), sustaining losses.

Crypto market dives as Trump and Musk clash over government spending

The cryptocurrency market dropped 6% in the past 24 hours, erasing more than $170 billion from its market capitalization. Top cryptocurrencies Bitcoin, Ethereum, XRP and Solana led the downtrend, declining by 3%, 7%, 5%, and 6%, respectively. Bitcoin briefly dropped below $101,000, while ETH plunged to $2,420.

The decline sparked a long squeeze, with crypto futures liquidations rising to $964 million in the past 24 hours, according to Coinglass data. Long liquidations accounted for 90% of that figure, while shorts accounted for 10%. The liquidation amount could be understated, considering exchanges' APIs often face delays in reporting liquidations to third-party platforms.

The decline follows a heated clash between Tesla and SpaceX CEO Elon Musk and President Trump over the One Big Beautiful Bill Act (OBBBA). The bill, which narrowly passed the House by a vote of 215-214, aim to permanent tax cuts from the 2017 Tax Cuts and Jobs Act (TCJA), which Trump signed into law. It also includes a $4 trillion increase in the US debt ceiling, among other key issues.

Musk publicly condemned the bill in a series of posts on social media platform X, calling it a "Big Ugly Spending Bill." He stated that the bill would increase the government deficit by $2.5 trillion and that Trump's tariffs would likely spark a recession in the second half of 2025.

In response, Trump dismissed Musk's criticism, alleging it was motivated by the bill's inclusion of the elimination of electric vehicles’ (EVs) tax credits. "The easiest way to save money in our Budget, Billions and Billions of Dollars, is to terminate Elon's governmental subsidies and contracts," wrote Trump in a post on the Truth Social platform on Thursday.

However, Musk denied the claims, citing instances where he had advocated for cutting tax subsidies for EVs.

Musk was a key supporter of President Trump during his 2024 presidential campaign. After his inauguration on January 20, Trump appointed Musk to lead the Department of Government Efficiency (DOGE) to help reduce government waste and spending. Musk eventually stepped down from the agency last week.