Key Points
- Nearly $1 billion worth of crypto positions were liquidated on June 5th, largely due to a public spat between Elon Musk and Donald Trump.
- Bitcoin [BTC] traders experienced the largest losses, with over $340M in liquidations.
A public disagreement between Elon Musk and President Donald Trump resulted in almost $1 billion in crypto positions being liquidated on June 5th.
Bitcoin [BTC] traders were hit the hardest, with losses exceeding $340M. Leveraged bulls accounted for the majority of these liquidations, totaling $305M.
The Impact on Bitcoin
This occurrence led to a significant drop in Bitcoin’s value, bringing it down to $100K for the first time since mid-May. Despite this, hedge fund manager James Lavish criticized those selling off their Bitcoin in response to the Musk-Trump dispute.
Lavish argued that those selling Bitcoin due to this conflict were missing the point of the cryptocurrency, viewing it as a hedge against fiscal debt fallout. He suggested that this crisis should be seen as a buying opportunity rather than a selling spree.
At the time of writing, Bitcoin had bounced back to $103K following Musk’s agreement to deescalate the situation. However, the question remains whether Bitcoin will maintain its value above $100K in anticipation of the upcoming U.S. labor market update.
Future Predictions for Bitcoin
Most analysts are predicting Federal interest rate cuts in the third quarter, with the U.S. jobs report for May likely to influence this decision. If the U.S. labor market remains robust, the agency may avoid making hasty cuts.
In terms of the July meeting, there is a 32% chance of a 0.25% rate cut to 4.00-4.25%. The potential for a positive macro setup in the third quarter without the burden of a tariff war could stimulate the Bitcoin and crypto markets.
However, short-term pressure may continue to affect Bitcoin. Data analytics firm Glassnode warned that Bitcoin’s daily realized profit had surpassed $1B, a threshold that has previously led to local peaks.
Overall, Bitcoin seems to have established a new local peak at $111K for the second quarter. However, there may still be room for growth if the macro environment improves later in the year.
