Key Takeaways
- Bitcoin fell below $100K, hitting $98,046 on January 27.
- China's AI app DeepSeek caused significant market turbulence.
- $864 million was liquidated in the crypto market in 24 hours.
Bitcoin (BTC) dropped below $100,000 for the first time since President Donald Trump took office last week.
On January 27, Bitcoin’s value fell to $98,046, marking a notable dip as market conditions reflected broader economic and technological trends.
DeepSeek’s impact on markets
The drop is attributed to the rapid success of China’s AI app DeepSeek, which overtook ChatGPT to top Apple’s App Store rankings in the U.S. within a week of its launch.
The app’s rise spurred fears of an AI arms race, leading to turbulence in global markets.
Alvin Kan, COO at Bitget Wallet, commented:
The hype around DeepSeek and broader volatility in the US AI market has spooked investors, leading to a flight to safety.
Tech sector fallout
The impact of DeepSeek’s dominance extended to the tech sector.
Nvidia, a leader in AI chip manufacturing, saw its valuation drop by 3.12% on January 24, reflecting investor unease.
Market liquidations
Bitcoin’s market turmoil resulted in $864 million in liquidations over 24 hours, with $250 million from Bitcoin long positions alone, according to CoinGlass.
Justin d’Anethan of Liquifi noted:
The scramble for downside protection suggests traders are bracing for further chop.
Federal Reserve outlook
Adding to the cautious sentiment, the U.S. Federal Reserve is expected to maintain interest rates between 4.25% and 4.5% at its January 28–29 meeting, as indicated by the CME FedWatch tool.
Lunar New Year prospects
Amid the uncertainty, Matrixport analysts suggested potential market positivity due to the Lunar New Year, traditionally a favorable period for Bitcoin.
