Bitcoin Drops Below $98K as DeepSeek Affects Market Sentiment
Bitcoin dropped to $97,800, influenced by market sentiment shifts due to concerns over the Chinese AI startup DeepSeek's impact on U.S. technology valuations. Key developments include:
- Whales liquidated overleveraged buyers on perpetual futures exchanges.
- AI tokens experienced sell-offs up to 40%, affecting GameFi assets as well.
- Nasdaq futures fell by 700 points; Nvidia shares indicated a 10% drop in pre-market trading.
- Trader Alex Kruger noted that uncertainty leads to derisking, exacerbating market volatility.
- Upcoming Fed meeting anticipated to maintain hawkish stance on interest rates.
Despite current bearish trends, institutional participation may increase in the next few months, with opportunities identified in low market-cap layer-1 blockchains.
What to Watch
Key Upcoming Crypto Events:
- Jan. 27: Mainnet launch of Abstract (Ethereum L2).
- Jan. 28: Hedera network upgrade to v0.57.5.
- Jan. 29: Cardano's Plomin hard fork upgrade.
- Feb. 4: MicroStrategy earnings report.
- Feb. 4: Pepecoin halving at block 400,000.
Market Movements
- BTC down 5.95% to $98,784.45.
- ETH down 6.12% at $3,050.20.
- Overall market capitalization dropped by 8.5%.
- Funding rates for BTC flipped negative, indicating a bias towards shorts, historically marking local price bottoms.
Technical Analysis
The RSI on hourly charts fell to 20, indicating strong bearish momentum—the lowest level in five months. Readings below 30 suggest oversold conditions and potential for a bounce.
Crypto Equities
- MicroStrategy closed at $353.67, down 5.11%.
- Coinbase closed at $298.00, down 4.9% in pre-market.
- Galaxy Digital Holdings closed at C$32.52, down 4.18%.
ETF Flows
Spot BTC ETFs reported a daily net flow of $517.7 million, totaling cumulative net flows at $39.94 billion.
Token Events
Governance votes are ongoing for various DAOs, including Compound DAO and Clover Finance DAO, regarding adjustments and rebranding proposals.
