In what feels like a classic case of “when tech sneezes, crypto catches a cold,” Bitcoin and other cryptocurrencies stumbled into the final week of January 2025. The leading cryptocurrency dipped below the psychological $100,000 mark earlier today, with traders scrambling to adjust their positions.
The culprit? A surprising announcement from Chinese AI startup DeepSeek sent shockwaves through the tech sector, claiming they’ve developed an AI model that could match industry leaders at a fraction of the cost. This news hit U.S. tech stocks hard, with the Nasdaq tumbling more than 3%, and crypto markets followed suit.
The crypto mining companies that have pivoted to AI ventures took the heaviest beating. Core Scientific shareholders had a particularly rough morning, watching their stock plummet 21%, while Terawulf and Iren (you might remember them as Iris Energy) both shed 16% of their value.
But there’s more to this story than just the AI angle. The market’s still processing last week’s executive order on crypto from President Trump. While many traders had been hoping for a full commitment to a Bitcoin reserve, what they got instead was more nuanced – language about a “stockpile” rather than an active buying program. As Standard Chartered’s Geoff Kendrick puts it, the “hope phase” is now over, and reality is setting in.
The numbers tell a painful story for leveraged traders: over $250 million in long positions have been liquidated in the past 24 hours, according to CoinGlass. That’s what happens when bullish bets meet an unexpected market downturn.
Looking ahead, all eyes are on the Federal Reserve meeting this Wednesday. LMAX’s Joel Kruger offers some perspective: “Investors are caught between hope for accommodation and fear of a less dovish Fed than they’d like.” However, he maintains an optimistic long-term view, emphasizing that Bitcoin’s price action isn’t fundamentally bearish.
So what’s the takeaway? Bitcoin’s tight correlation with tech stocks continues to shape its price movements, perhaps more than its supposed role as “digital gold.” With Bitcoin trading around $101,343 as of late morning trading, market participants are watching closely to see if this dip represents a buying opportunity or the start of a deeper correction.
Remember, though, that this is still a market where Bitcoin trades above $100,000 – a figure that would have seemed outlandish just a couple of years ago. Sometimes it’s worth taking a step back to appreciate the bigger picture, even on red days like today.
Also read: Bitcoin Falls Under $100K as Traders Cash Out on Trump OrderÂ
