Bitcoin took a hit on Monday, falling 6.5% and falling below $100,000. This is the biggest drop in Bitcoin price since early December. Other cryptocurrencies such as XRP and Solana also suffered significant losses, with XRP falling 9%. This sharp drop followed a larger decline in US technology stocks, particularly futures markets such as Nasdaq and S&P 500.
New Chinese AI technology raises concerns
The sudden market drop is largely due to the launch of DeepSeek, a new artificial intelligence model developed by a Chinese startup. Experts say DeepSeek’s ability to match the best AI systems while being more profitable could pose a serious challenge to American tech companies. If this new AI model gains traction, it could drive down the value of US tech stocks, and investors are worried its impact will also be felt in the cryptocurrency market.
The news has unsettled traders, especially in the cryptocurrency sector, as these markets are particularly sensitive to technological changes. QCP Asia, a trading company, noted that DeepSeek’s efficiency could disrupt the business models of major US companies, potentially leading to further instability in the markets.
Trump’s executive order fails to improve market sentiment
Although President Trump recently signed an executive order aimed at shaping US cryptocurrency policy, the market response was lukewarm. The order created a task force to regulate the industry, but did not include the Bitcoin reserve that some expected.
Investors were hoping for more immediate and significant action, such as the establishment of a government-backed Bitcoin reserve. “Without a clear and decisive move like a Bitcoin reserve, the market was not going to react positively,” said Sean McNulty, head of APAC derivatives at FalconX.
Tech and crypto markets face uncertainty
Despite the executive order’s emphasis on cryptocurrencies, the introduction of DeepSeek is casting a long shadow over the technology and cryptocurrency markets. Investors were hoping that Trump’s political actions would drive markets higher, but fears around disruptive AI technology appear to be dominating sentiment at the moment.
As of Monday morning, the value of Bitcoin was around $99,200, and analysts will be keeping an eye on any developments in both the artificial intelligence sector and cryptocurrency regulation that could change market trends.
Also read: The future of money: Bitcoin, Solana and Dogecoin shape cryptocurrency trends