Trump-Musk Feud Sparks Market Bloodbath: Crypto, ETFs, and Wall Street Darlings Get Crushed

When two billionaire egos collide, portfolios tremble. The very public spat between former President Trump and Elon Musk sent shockwaves through markets—crypto tanks, ETFs bleed, and meme stocks get memed to oblivion.

No safe havens here. The fallout proves even 'too big to fail' personalities can trigger a sell-off faster than a crypto exchange halting withdrawals. Classic finance: where hubris meets margin calls.

Trump’s tax bill triggers massive losses

The selloff was driven by panic, not fundamentals. Peter Atwater, who runs Financial Insyghts, said, “You can go from being an incredible beneficiary one moment and then being bludgeoned the next.” Atwater warned that crowded Elon trades are like dominos — once they fall, they don’t stop.

While the feud rocked risk-heavy assets, traditional indexes didn’t flinch. The S&P 500 ROSE 1.5% for the week. The extended FANG index, which excludes Tesla, broke a record. Treasury yields on ten-year bonds surged more than 10 basis points after new jobs numbers killed off short-term recession fears.

The dollar, meanwhile, dropped to its lowest point in nearly two years. But retail traders — the ones riding dreams instead of earnings — got smoked.

Tesla’s stock acts like a scoreboard for Elon’s ambitions. Trump’s growing crypto empire, his media play, and his MAGA-branded products give him financial influence that stretches far beyond politics. Each post, each insult, each headline — it’s all a chance to suck in capital from retail traders chasing clout instead of value.

ARK Innovation ETF and Baron Partners Fund both got caught in the carnage before Friday’s mild rebound. The problem is the entire system is built for these hype trades. Since Elon and TRUMP teamed up on the campaign trail, backed by Elon’s $250 million contribution, the market has turned into a giant meme casino. Every new product, from joke tokens to leveraged ETFs, promises insane upside with almost no guardrails.

Speculative gains vanish in a day

Some of those bets were working, for a while. Destiny Tech100 Inc. soared 500% in a month after the November 5 election. Dogecoin ran from 15 cents to 43 cents. Even ARK popped 26% in under two weeks. These moves weren’t backed by earnings calls. They were driven by emotion.

Jay Hatfield, CEO of Infrastructure Capital Management, said, “I put him in the separate category of the Zeus of personality cults, beyond anything that has ever happened.” Hatfield was talking about Elon, but the same could apply to Trump, whose fans treat his products like religion.

The speculative wave has been building since the pandemic, but got supercharged once Trump returned to the Oval Office. Elon’s economic plan, ironically named after a crypto token born as a dog joke, helped cement the meme style of investing.

Meanwhile, Trump’s media company is pushing toward launching the Truth Social Bitcoin ETF, one of several MAGA-themed crypto products feeding this frenzy.

It’s not just gamblers getting sucked in though. Bloomberg Intelligence’s Athanasios Psarofagis said 16% of ETFs launched this year are single-stock products using either options or leverage. That’s a record. Most of them are made for retail traders looking to swing big and buy every dip.

Dave Mazza, the CEO of Roundhill Investments, who launched a Tesla ETF in February, said, “Retail traders — the bro trade component of retail — they’ve never really cared much about fundamentals.” Mazza said it’s all about the story, not the numbers.

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