Bitcoin Plunges Below $100k as AI App Challenges U.S. Tech Valuations

Bitcoin Drops Below $101k Amid Chinese AI App Market Disruption

Bitcoin, the world's leading cryptocurrency, has dropped below the $101,000 mark, marking a significant decline in the crypto market. This downturn comes amidst the rapid rise of DeepSeek, a Chinese AI application that has sparked concerns about U.S. tech valuations. The app's development costs of under $10 million stand in stark contrast to ChatGPT's $157 billion valuation, raising questions about potential overvaluation in the U.S. tech sector. This disparity has prompted a sell-off in U.S. technology stocks, which has subsequently spread to cryptocurrency markets.

Bitcoin's price has fallen by more than 5% from its recent high of nearly $110,000, testing the psychological support level of $100,000. The price briefly touched $99,902 during the day's trading, marking a significant drop from its recent peak. This decline has also triggered substantial liquidations across cryptocurrency exchanges, with over $613 million worth of positions liquidated in 24 hours. Long traders bore the brunt of the losses, with $569 million in liquidations, while short traders accounted for $59 million.

Alternative cryptocurrencies (altcoins) have also experienced significant declines, with Ethereum, XRP, and Solana seeing drops of 8% to 10%. Popular meme coins, such as Dogecoin and Shiba Inu, have also fallen by 8% and 7%, respectively. PEPE and TRUMP tokens have seen more severe impacts, with nearly 13% losses. The market turbulence coincides with recent political developments in the United States, as President Donald Trump has initiated steps to reshape cryptocurrency policy, ordering the creation of a dedicated working group to propose new regulations and explore the possibility of establishing a national cryptocurrency stockpile.

BlackRock CEO Larry Fink has revealed ongoing discussions with sovereign wealth funds regarding Bitcoin investments, highlighting continued institutional interest despite market volatility. This development suggests potential long-term support for cryptocurrency markets, even amid short-term price fluctuations. The Federal Reserve's upcoming policy meeting, the first since Trump took office, has added another layer of market uncertainty. While rates are expected to remain unchanged,