Cryptocurrency Market Sees Sharp Decline Amid Global Risk-Off Mood
The cryptocurrency market experienced a significant downturn on Monday, with Bitcoin plummeting as much as 6.5% to below $100,000, its largest intraday drop since December 6. The decline was mirrored across most equity markets, with US technology stocks leading the way.
Tech Stocks and Cryptocurrencies: A Growing Correlation
The correlation between technology stocks and cryptocurrencies has increased this year, with the two asset classes moving more in tandem. This is largely due to the successful launch of exchange-traded funds that invest in cryptocurrencies and President Trump’s endorsement of the industry, which boosted crypto prices last year.
Chinese AI Model Sparks Concerns
The emergence of a new Chinese artificial-intelligence model, developed by startup DeepSeek, has sparked concerns that it could disrupt US tech valuations. The model’s cost efficiency and groundbreaking open-source technology have raised questions about how the US will respond.
Executive Order Fails to Boost Crypto Prices
Despite President Trump’s executive order to support the cryptocurrency industry, prices have failed to rally. The order, which was issued last week, stopped short of confirming the creation of a Bitcoin stockpile, something Trump had promised during his campaign.
Market Reaction: A Mixed Bag
Traders have shrugged off the executive order, with some arguing that prices already reflected the move. The digital-asset market took the order largely in stride, posting modest gains in its aftermath. However, the lack of a stockpile plan has left some investors disappointed.
A Shift in Sentiment
The cryptocurrency market has been on a tear since Trump’s election victory in early November, with Bitcoin surging more than 50%. However, the recent decline suggests a shift in sentiment, with investors taking a more cautious approach.
The Road Ahead
As the cryptocurrency market navigates this new landscape, investors will be closely watching for signs of a rebound. With concerns about the Chinese AI model and the lack of a stockpile plan weighing on prices, it remains to be seen how the market will respond in the coming days.
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