Bitcoin's $864M Correction: AI Fears Spark Sell-Off

Bitcoin Faces Major Correction Prediction by Arthur Hayes

Bitcoin, the world's leading cryptocurrency, has been facing significant pressure in recent days, with a major correction predicted by Arthur Hayes, the co-founder of BitMEX. The crypto market has been volatile, with a staggering $864 million in liquidations over a 24-hour period, driven largely by investor reactions to the emerging AI competition, particularly the rise of China's AI model DeepSeek.

The crypto market experienced a staggering $864 million in liquidations over a 24-hour period, driven largely by investor reactions to the emerging AI competition, particularly the rise of China's AI model DeepSeek. The hype around DeepSeek and broader volatility in the US AI market has spooked investors, leading to a flight to safety, according to Alvin Kan, COO at Bitget Wallet.

Recent data reveals approximately $864 million in liquidated positions within the crypto market, primarily affecting Bitcoin (BTC) traders. According to CoinGlass, this included around $250 million in long positions. The selling pressure was exacerbated by traders attempting to mitigate risk amid fears of further market declines.

Some derivatives who put bullish positions on margin got called, said Justin d’Anethan, head of sales at token launch advisory firm Liquifi. This indicates that traders are not just reacting to immediate selling pressure but are also preparing for continued instability in the near term.

As fluctuations in the crypto market coincide with economic shifts, analysts note that monetary policy decisions are heavily influencing investor behavior. Upcoming meetings of the US Federal Reserve are crucial as the market expects the interest rates to remain between 4.25% and 4.5% without significant alterations. The current atmosphere of uncertainty has created a defensive posture among traders, impacting crypto valuations.

Despite the prevailing negative sentiment, some analysts, such as those from Matrixport, highlight potential bullish trends in the context of seasonal celebrations. The convergence of the Chinese New Year and Lunar New Year could present historically statistically favorable conditions for Bitcoin over the next 20 days. Market participants are keenly observing these trends as they prepare for the coming weeks.

The intersection of AI developments, shifting market sentiments, and monetary policy expectations create a complex landscape for cryptocurrency investors. While current market dynamics have led to significant liquidations, the