Bitcoin and Crypto Prices Drop Amid Market Sell-Off
Bitcoin and crypto prices have plunged, following a stock market decline triggered by the rising popularity of the China-based AI app DeepSeek. The bitcoin price has now fallen below $100,000, dropping from its recent all-time high of nearly $110,000. The decline comes just ahead of U.S. President Donald Trump’s inauguration.
Warnings of a Financial Crisis Grow
BlackRock’s Larry Fink has disclosed discussions with sovereign wealth funds regarding bitcoin purchases. Meanwhile, prominent crypto trader Arthur Hayes has warned of an impending “financial crisis.” The prediction suggests that the Federal Reserve may soon introduce new stimulus measures to counteract economic instability.
Bitcoin Correction Expected
A sharp bitcoin correction has been predicted by Hayes, who co-founded BitMex and later established the Maelstrom investment fund. He has projected a drop to $70,000-$75,000, describing it as a “mini financial crisis.”
Trump’s Impact on Bitcoin and Crypto
Bitcoin surged past $70,000 after Trump’s November election victory, as traders speculated on his pro-crypto stance. Last week, he took steps to overhaul crypto policy, creating a bitcoin and cryptocurrency working group. The team has been tasked with drafting new regulations and assessing the potential of a national cryptocurrency reserve.
AI Boom Shakes Bitcoin and Stock Market
The bitcoin price has mirrored movements in the U.S. stock market, which remains closely tied to high-growth tech stocks. Since 2022, artificial intelligence advancements have driven tech valuations. However, DeepSeek’s breakthrough—delivering OpenAI-level performance with fewer chip requirements—has rattled investors.
Market analyst Adam Kobeissi has noted that DeepSeek’s rapid rise has created a “risk-off” environment. The resulting sell-off has led to a 10% drop in Ethereum rival Solana’s price.
Federal Reserve Policy Moves Awaited
The Federal Reserve is expected to maintain current interest rates in its upcoming policy meeting. Trump, however, has called for immediate rate cuts, citing falling oil prices. “With oil prices going down, I’ll demand that interest rates drop immediately,” Trump stated during the World Economic Forum.
Bitcoin Price Forecast for 2025
Despite recent losses, Hayes has predicted a long-term rally. He believes that renewed Fed stimulus will drive bitcoin to $250,000 by year-end. The U.S. national debt has soared past $34 trillion, largely due to pandemic-related stimulus measures. Inflation exceeded 10% in 2022, forcing the Fed to raise interest rates aggressively. Rising debt interest payments have fueled concerns about a potential “death spiral.”
Conclusion
The bitcoin price remains highly volatile, influenced by Federal Reserve policies, AI-driven stock market trends, and Trump’s stance on crypto regulations. As uncertainty grips the financial markets, investors are closely watching whether new stimulus measures will trigger another bitcoin surge or deepen the ongoing correction.
