Crypto Market Bleeds $920B as Tech Sell-Off Ripples Through

Coin WorldTuesday, Jan 28, 2025 1:39 am ET

1min read

The cryptocurrency market experienced a significant decline within the last 24 hours, with a total of $920 billion wiped out. This substantial loss is closely linked to a broader sell-off in the technology sector, which has had a ripple effect on cryptocurrencies, given their high correlation with tech equities.

The recent launch of a free, open-source AI model by Chinese startup DeepSeek has intensified competition in the tech industry, leading to substantial losses in U.S. tech stocks. This development has contributed to the overall market downturn, impacting both tech stocks and cryptocurrencies.

Bitcoin, the leading cryptocurrency, fell below $100,000, reaching an 11-day low. Other major cryptocurrencies, including Ethereum, XRP, Solana, and Dogecoin, also faced significant declines. Analysts suggest that the high correlation between Bitcoin and tech stocks, particularly the Nasdaq 100, has fueled this downturn.

Market sentiment has also been influenced by expectations regarding U.S. Federal Reserve policies. Investors anticipate that the Federal Reserve will maintain higher interest rates for an extended period, which has historically led to a reduction in risk appetite across various asset classes, including cryptocurrencies.

The upcoming Federal Open Market Committee (FOMC) meeting is expected to have a significant impact on the cryptocurrency market. The U.S. Federal Reserve's stance on interest rates heavily influences speculative assets, and the crypto world is eagerly awaiting the conclusion of the meeting.

While the cryptocurrency market is volatile, it has demonstrated resilience after substantial downturns in the past. Historical events such as the Mt.Gox crash of 2014 and the Terra/Luna collapse in 2022 have shown that the market can recover from significant setbacks. Although short-term recovery might be challenging, the market's long-term trajectory could still point toward growth, driven by innovation, increased adoption, and greater financial integration.

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