Crypto Crash: Bitcoin Plunges as AI Fears Grip Markets

Market Jitters: Bitcoin Plummets Below $100,000

The cryptocurrency market is reeling as Bitcoin’s value plummeted below $100,000 on Monday, marking its lowest point in 11 days. This sudden downturn is attributed to a wave of caution sweeping across global markets, sparked by the rapid rise of a Chinese artificial intelligence model.

AI’s “Sputnik Moment” Sparks Sell-Off

Technology stocks took a nosedive as investors grew concerned that Chinese AI startup DeepSeek could disrupt the dominance of Western companies in the sector. This phenomenon has been dubbed AI’s “Sputnik moment,” reminiscent of the former Soviet Union’s launch of a satellite that kick-started the space race in the late 1950s.

Risk-Off Sentiment Hits Crypto Markets

Bitcoin’s losses are largely driven by the prevailing risk-off sentiment in the markets, according to eToro analyst Simon Peters. The cryptocurrency struggled to make gains last week, following a rally that had seen it break above $100,000 after U.S. President Donald Trump’s election.

Disappointment Over Trump’s Crypto Announcement

Geoffrey Kendrick, global head of digital asset research at Standard Chartered, notes that a decline in Nasdaq futures has hurt crypto markets. Moreover, disappointment over the Trump administration’s announcement about a cryptocurrency stockpile has left digital assets more vulnerable to a sharp selloff. Crypto enthusiasts had been expecting a more significant nod from the new administration, but Trump’s day-one announcements failed to feature any notable crypto initiatives.

Regulatory Uncertainty Weighs on Crypto

The prospect of interest rates staying higher for longer has also taken a toll on riskier assets, including cryptocurrencies, according to Thomas Puech, CEO of digital asset hedge fund Indigo. U.S. Federal Reserve policymakers are set to meet this week, and it’s expected that interest rates will remain unchanged.

Crypto’s Volatile Ride Continues

As the dust settles, Bitcoin’s value stands at $98,852.17, down around 6% on the day. The cryptocurrency’s sharp decline in early trading has left investors reeling, and its future trajectory remains uncertain. One thing is clear, however: the crypto market’s volatility shows no signs of abating anytime soon.

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