The cryptocurrency market faced a sharp downturn in early trading hours today, with Bitcoin (BTC) retreating toward the $101,000 level and dragging the broader digital asset sector into the red. At the heart of the sell-off lies a combination of political controversy, macroeconomic uncertainty, and a wave of liquidations across leveraged positions.
According to data from CoinGlass, over $308 million in crypto long positions were liquidated within the past 24 hours, marking one of the steepest liquidation events since April.
Bitcoin accounted for approximately $91 million of that figure, followed by Ethereum (ETH) with about $78 million in liquidations.
Trump vs. Musk Adds Fuel to the Fire
Market sentiment took a blow following an unexpected war of words between former U.S. President Donald Trump and Tesla CEO Elon Musk. During a campaign stop in Phoenix, Trump criticized Musk for allegedly backing out of previous political commitments. The tech mogul swiftly responded on X, calling Trump “unreliable and self-serving.”
While the spat might seem superficial on the surface, analysts believe the confrontation could complicate the political dynamics surrounding crypto regulation.
Both Trump and Musk have held significant sway over crypto markets in recent years, and any perceived instability in their relationship adds to uncertainty for investors.
“Markets dislike uncertainty, and a Trump-Musk rift, especially as both may influence future crypto policy – adds noise that investors are trying to price in,” said Adam Cochran, a partner at Cinneamhain Ventures, in a post on X.
Weak Macro Backdrop and Dollar Strength
Adding to the bearish tone is renewed macroeconomic pressure. Friday’s stronger-than-expected U.S. jobs data reignited concerns that the Federal Reserve may hold interest rates higher for longer. The U.S. Dollar Index (DXY) climbed to a one-month high, signaling a move away from risk assets such as crypto.
“Stronger dollar, weaker BTC – this inverse correlation is playing out as expected,” noted Noelle Acheson, author of the “Crypto Is Macro Now” newsletter. “We also have Treasury yields climbing, which reduces the appeal of speculative assets.”
Source: TradingView
Traders are now bracing for next week’s Consumer Price Index (CPI) release and the Federal Open Market Committee (FOMC) meeting, which could further determine the short-term trajectory of digital assets.
Bitcoin’s downturn also exposed the fragility of overleveraged markets. Funding rates on perpetual futures had hovered at abnormally high levels in the past week, indicating that bullish traders were paying significant premiums to maintain long positions.
As price dipped below critical support levels, cascading liquidations triggered additional sell pressure. A surge in forced unwinding of positions, particularly in altcoins such as Solana (SOL), Dogecoin (DOGE), and PEPE, all of which saw double-digit declines.
“When funding rates stay elevated and sentiment becomes euphoric, even minor shocks can cause outsized volatility,” explained James Lavish, managing partner at the Bitcoin Opportunity Fund.
Despite today’s drawdown, some market participants view the correction as healthy in the context of the broader bull cycle.
“It’s a shakeout, not a breakdown,” said Ki Young Ju, CEO of CryptoQuant. “We still see strong on-chain accumulation and no signs of exchange inflows from long-term holders.”
Source: CryptoQuant
Others are urging caution as volatility is expected to remain high through mid-June. Traders see $104,000 as support; breaking it may push BTC toward $100,000–$98,000, analysts say.
BTC Market Update
Technical analysts have highlighted the $101,700 level as a critical support zone for Bitcoin. Earlier today, BTC closed an 8-hour candle decisively below this threshold – an indication of a potential shift into a deeper corrective phase.
Following yesterday’s sharp decline, Bitcoin may attempt a short-term recovery toward the $103,000–$103,500 range. However, such a rebound could serve as a setup for renewed selling pressure, targeting the next major support zones at $98,295, $96,250, and $93,350.
Meanwhile, Bitcoin dominance (BTC.D) continues climbing and is approaching resistance near the 65% level – historically a point of caution for altcoin investors. Broader market indices also show signs of structural weakening.
The TOTAL crypto market cap has broken below a key level at $3.22 trillion. Analysts suggest a potential backtest of this level before further downside toward $3.0 trillion and $2.86 trillion.
Similarly, TOTAL2 – excluding Bitcoin, has dropped below its critical support at $1.16 trillion. A brief retest could be followed by declines toward $1.07 trillion, $1.04 trillion, or even $1.00 trillion. TOTAL3, which excludes both BTC and ETH, is heading toward a vital support level around $794.23 billion.
While some bounce could occur here, analysts warn it may offer only brief relief and caution against entering long positions in the current environment.
Conclusion
The crypto market’s sharp pullback today underscores the fragility of sentiment in an overleveraged environment, where a mix of political theatrics, macroeconomic stressors, and cascading liquidations can rapidly unravel bullish momentum. The Trump-Musk clash, while seemingly peripheral, has amplified investor unease at a time when regulatory and political narratives remain pivotal to market direction.
Meanwhile, a stronger dollar and rising Treasury yields continue to sap risk appetite. Technically, Bitcoin’s break below the $101,700 support signals potential for deeper corrections, with key zones around $98,000 now in focus.
Read more: Trading with Free Crypto Signals in Evening Trader Channel
