Bitcoin has dropped below $100,000 for the first time since Donald Trump became president. This happened as global markets reacted to increased competition in the AI sector and changes in monetary policies. On January 27, Bitcoin hit a low of $98,046.
Much of this market turbulence comes from the rapid rise of a Chinese AI app called DeepSeek. It quickly claimed the top spot on the Apple App Store in the U.S., pushing ChatGPT down to third place just a week after its launch.
Alvin Kan, the COO of Bitget Wallet, shared his thoughts: “The hype around DeepSeek and the overall volatility in the U.S. AI market have spooked investors. They’re opting for safer investments.” He continued, “With the next Federal Reserve meeting coming up and no expected rate cuts, the market is adjusting to a more cautious outlook.”
DeepSeek’s AI model was developed for just $6 million. Its success has raised concerns about an escalating AI arms race, affecting markets worldwide. Nvidia, a major player in the AI boom, saw its valuation soar to $3.49 trillion but dropped 3.12% by the close of trading on January 24.
In the crypto market, around $864 million in positions were wiped out. Bitcoin long positions accounted for $250 million of that, according to CoinGlass data.
Justin d’Anethan, head of sales at Liquifi, commented, “Some traders who had bullish positions on margin got called. The rush for downside protection shows that traders are preparing for more volatility. With no major news until this week’s Federal Open Market Committee meeting, the market will likely stay in this range as it waits for new policy signals.”
The Federal Reserve’s first interest rate decision under President Trump is set for January 28 and 29. It is expected to keep rates unchanged at 4.25% to 4.5%, according to the CME FedWatch tool.
Despite the negative sentiment, analysts at Matrixport are optimistic. They point to the Lunar New Year celebrations in Asia this week, calling it the “most statistically favorable 20-day window for Bitcoin.”