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Bitcoin Drops Below $100K Amid AI Hype and Fed Uncertainty

Coin WorldMonday, Jan 27, 2025 5:57 am ET

1min read

Bitcoin falls below $100K for the first time under Trump presidency

Bitcoin, the world's largest cryptocurrency, has fallen below the $100,000 mark for the first time since US President Donald Trump took office on January 20, 2025. The decline comes amidst a broader market downturn, triggered by the rapid rise of China-based AI app DeepSeek, which claimed the top spot on Apple's App Store rankings in the US, displacing ChatGPT to third place just a week after its launch.

The hype around DeepSeek and broader volatility in the US AI market has spooked investors, leading to a flight to safety. Alvin Kan, chief operating officer at Bitget Wallet, stated, "The hype around DeepSeek and broader volatility in the US AI market has spooked investors, leading to a flight to safety."

With the next Federal Reserve meeting approaching and expectations of no rate cuts, the market is pricing in a more hawkish tone, adding to the cautious mood. Kan added, "With the next Federal Reserve meeting approaching and expectations of no rate cuts, the market is pricing in a more hawkish tone, adding to the cautious mood."

Nvidia, whose dominance in the AI boom drove its valuation to a world-leading $3.49 trillion, shed 3.12% by the Jan. 24 closing bell. The decline in Nvidia's stock price reflects investor concerns over the potential impact of DeepSeek's AI model on the company's market position.

In the crypto market, around $864 million in positions were wiped out, with Bitcoin (BTC) long positions pitching in $250 million alone, according to CoinGlass data. The scramble for downside protection suggests traders are bracing for further chop. With no major catalysts until this week's Federal Open Market Committee (FOMC) meeting, the market is likely to hover in this range as it waits for fresh policy cues.

The US Federal Reserve's first interest rate decision under President Trump is scheduled for Jan. 28 and Jan. 29, which is expected to remain unchanged at 4.25% to 4.5%, according to the CME FedWatch tool. However, analysts at Matrixport present a bull case despite piling negative market

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