Bitcoin and cryptocurrency markets have experienced a sharp decline, mirroring a broader stock market sell-off driven by the rapid ascent of China-based artificial intelligence app DeepSeek.
The price of bitcoin has fallen below $100,000, a significant drop from its all-time high of nearly $110,000, reached just before Donald Trump’s inauguration as U.S. president.
This comes despite predictions from the CEO of Coinbase, a leading crypto exchange, that bitcoin could surpass gold’s $18 trillion market valuation.
In a notable development, Larry Fink, CEO of BlackRock, has disclosed ongoing discussions with sovereign wealth funds about investing in bitcoin.
Meanwhile, prominent crypto trader Arthur Hayes has sounded the alarm over an impending “financial crisis,” which he believes will prompt fresh stimulus measures from the U.S. Federal Reserve.
“I foresee a correction in bitcoin to the $70,000 to $75,000 range alongside a mini financial crisis,” Hayes, co-founder of BitMex and the Maelstrom investment fund, shared on X (formerly Twitter).
Bitcoin’s surge past $70,000 was initially fueled by Donald Trump’s 2024 election victory, as traders anticipated that his policies would support the growth of bitcoin and cryptocurrency markets.
Last week, Trump made good on his promise to prioritise crypto reforms, establishing a bitcoin and cryptocurrency task force aimed at drafting new regulations and exploring the creation of a national crypto reserve.
The value of bitcoin remains closely tied to the U.S. stock market, trading in parallel with high-growth tech stocks that have thrived during the artificial intelligence boom since 2022.
However, these stocks now face potential risks as DeepSeek’s capabilities rival those of OpenAI’s models, achieving similar performance with reduced chip requirements.
“Risk-off sentiment dominates as DeepSeek spooks investors,” market analyst Adam Kobeissi commented on X, highlighting the wider crypto market downturn, including a 10% drop in Ethereum competitor Solana.
As the financial landscape evolves, market participants are keeping a close watch on developments in both the crypto and AI sectors, anticipating further volatility ahead.
