Eliza Wong
Crypto Carnage Across Markets
July 2nd witnessed dramatic swings across cryptocurrency and traditional markets as the US Senate passed Donald Trump (唐纳德·特朗普)’s controversial ‘Big and Beautiful’ tax and spending bill. Bitcoin plummeted over $2,000 intraday while Ethereum sank 3.3%, triggering a liquidation tsunami. According to CoinGlass data, more than 101,000 traders saw positions obliterated within 24 hours.
Cascading Altcoin Losses
Major altcoins followed Bitcoin downward:– Cardano (ADA) dropped 5%
– Solana (SOL) shed 4%
– Dogecoin (DOGE) fell 4%
– Stellar Lumens (XLM) declined nearly 5%
The crypto market turmoil saw $261 million in leveraged positions forcibly closed. Long holders suffered most severely with $184 million liquidated compared to $76 million in shorts.
Crypto Stocks Follow Digital Assets Lower
The contagion spread to crypto-adjacent equities:– MicroStrategy plunged nearly 8%
– Coinbase retreated over 4%
– Robinhood declined 1.39%
The Big and Beautiful Bombshell
Senators narrowly approved Trump (唐纳德·特朗普)’s signature legislation by a 51-50 margin just days before the Independence Day recess. This follows House approval in June after contentious negotiations with holders of US Treasury bonds. Investors fled risk assets amid concerns that the bill would balloon fiscal deficits.
Key Legislative Provisions
The revised bill contains controversial measures:– Extension of 2017 Trump-era corporate tax cuts
– Elimination of tipped wage taxation
– New restrictions on Medicare and SNAP benefits
– Solar/wind tax credits limited to projects operational by 2027
– $500 billion allocated for border security and defense
Notably, the legislation terminates EV tax credits effective September 30.
Deficit Projections Cause Alarm
The Congressional Budget Office forecasts devastating fiscal impacts:– Senate version adds $3.3 trillion to deficits through 2034
– 12 million Americans projected to lose health coverage
– Debt ceiling increased by $5 trillion$
Stock futures reversed gains after the bill’s passage. The crypto market turmoil intensified as traders retreated from speculative assets ahead of US jobless claims data.
Market Reactions Beyond Crypto
Traditional markets registered distress signals throughout the trading day:
Asian Equity Retreat
– Japan’s Nikkei 225 slid over 1%
– South Korea’s KOSPI dropped nearly 2%
Both exchanges recovered slightly by closing, while Chinese yuan-denominated deposits saw unusual volatility.
Night Session Volatility
US equity futures erased early gains. Nasdaq 100 futures turned negative after the crypto market turmoil spread through derivatives markets. Market technicians noted elevated put/call ratios indicate hedging against further declines.
Analysts Interpret the Turmoil
Kronos Research CIO Vincent Liu attributed the crypto market turmoil to traders reducing exposure before economic releases. “Market liquidity remains fragile,” Liu observed. Most portfolio managers adopted defensive positioning during this period of crypto market turmoil.
Policy Uncertainty Dominates
LVRG Research Director Nick Ruck highlighted dual catalysts: “Bitcoin declined partly because traders took shelter before crucial US data, amplified by deficit concerns from the Senate bill passage.” The sharp price reversals underscore how crypto market turmoil now correlates with macro policy shifts.
The Trump-Musk Showdown
Elon Musk (埃隆·马斯克) launched blistering critiques of the legislation over social media: “Any lawmaker supporting this should feel profound shame. I’ll establish the American Party the day after passage.” This prompted extraordinary retaliation from Trump.
Extraordinary Presidential Threat
Trump questioned whether Musk should remain in the country: “We’ll consider deportation” he told reporters. Later posts accused Musk’s businesses of surviving on government subsidies: “Without taxpayer money, he’d return to South Africa.” The clash represents unprecedented hostility between former allies.
Navigating Market Turbulence
Historical data reveals leveraged positions become extremely vulnerable during crypto market turmoil:
Lessons From Liquidations
– Avoid 25x+ leverage during policy announcements
– Maintain trailing stop-loss orders
– Diversify across uncorrelated assets– Monitor Senate.gov for legislative calendars
CoinGlass metrics indicate systemic risks peak during US legislative sessions. The $261 million liquidation event ranks among 2025’s largest incidents.
Positioning for Recovery
Midday reversals saw bitcoin recover to $107,700 (-0.1% weekly) by evening. Institutional flows suggest sophisticated players bought the dip. Derivatives traders added July $120,000 call options despite crypto market turmoil.
Forward Market Implications
Several emerging patterns deserve attention:
Crypto’s Macro Sensitivity Pattern
Digital assets now regularly react faster than equities to fiscal news. The Senate bill passage accelerated this trend, showing crypto market turmoil as leading indicator.
Regulatory Crosscurrents
House Speaker Mike Johnson (迈克·约翰逊) indicated plans to approve revised legislation by Trump’s July 4 deadline. Passage would mark the first successful reconciliation bill since 2022. Watch for SEC crypto regulation consideration amendments added during reconciliation.
The synchronized retreat across digital and traditional assets serves as reminder that fiscal policy remains markets’ primary driver. With crypto market turmoil now routinely spreading contagion, traders must prioritize Treasury yield monitoring and congressional calendar alerts. Wise investors maintain reduced leverage and preserve dry powder for volatility-fueled opportunities.
Consider three protective actions immediately:1) Review portfolio hedges against dollar strengthening
2) Convert speculative altcoin positions into stablecoins
3) Subscribe to CBOE volatility index alerts
Following Senate.gov updates provides valuable legislative foresight. These crypto market turmoil events will recur until fiscal discipline returns.
