Crypto Retreats as Musk-Trump Rift Adds to Recession Worries

Dogecoin (DOGE) and Cardano (ADA) led the crypto market lower on Friday, with both tokens plunging over 6% amid heightened fears of a recession and escalating tensions between President Donald Trump and Elon Musk.

DOGE dropped 6.9%, while ADA lost 6.5% over 24 hours, reflecting a clear risk-off sentiment as investors processed conflicting macroeconomic signals and political discord at the highest levels.

Bitcoin (BTC) briefly tested the $101K mark before rebounding above $102K during early Asian trading. Ethereum (ETH), BNB, XRP, and Solana (SOL) also posted losses ranging between 2% to 5%, indicating broad-based weakness across major digital assets.

Musk Warns of Recession, Markets React

Tensions flared after Musk publicly criticized Trump’s proposed tariff strategy, warning in a post on X that the plan could push the U.S. into recession before year-end.

“The Trump tariffs will cause a recession in the second half of this year,” Musk wrote, amplifying investor caution and triggering a fresh wave of crypto selling.

Jeff Mei, COO of BTSE, said the feud underscored “deep policy divisions” that risk derailing economic reform efforts and sowing market uncertainty.

“The fallout between Trump and Musk is more than personal — it’s a signal to markets that fiscal clarity may be at risk,” Mei told CoinDesk via Telegram.

Institutional Confidence Endures Despite Volatility

Despite the volatility, some industry players remain optimistic. Mei pointed to Circle’s explosive IPO performance as proof that institutional confidence in crypto infrastructure remains strong.

Nick Ruck, director at LVRG Research, echoed this view, noting that while the feud and recent U.S. economic data contributed to downside pressure, long-term fundamentals remain intact.

“The real concern is that political distractions could delay or derail economic recovery,” Ruck said. “Still, we’re seeing consistent institutional building across the space.”

Eyes on Washington

Markets now turn their attention to the ongoing U.S. debt ceiling standoff and Trump’s proposed “One Big Beautiful Act,” which could carry major fiscal implications if passed.

For now, crypto traders appear to be taking a cautious stance, awaiting clearer direction on both economic policy and geopolitical risk.

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