Monday saw Bitcoin drop below $100,000, its lowest level in 11 days. Analysts ascribed this decline to a wave of caution following a selloff in Western AI-related firms triggered by the growing popularity of a Chinese AI model.
The rise that had seen the largest cryptocurrency in the world burst beyond $100,000 following the election of U.S. President Donald Trump stalled last week.
Bitcoin was down almost 6% on the day at $98,852.17 at 1156 GMT after plunging precipitously in early trade to its lowest level since January 16.
Some dubbed AI’s “Sputnik moment”—referring to the former Soviet Union’s satellite launch that signaled the beginning of the space race in the late 1950s—when technology stocks fell due to traders’ concerns that Chinese AI startup DeepSeek might challenge Western companies’ hegemony in the industry.
“Seemingly driven by some risk-off sentiment circulating the markets currently due to DeepSeek,” eToro analyst Simon Peters commented in response to Bitcoin’s losses.
Standard Chartered’s global head of digital asset research, Geoffrey Kendrick, stated that while a drop in Nasdaq futures had harmed cryptocurrency markets, the Trump administration’s revelation of a bitcoin stockpile had disappointed investors and increased the likelihood of a major selloff in digital assets.
Some investors were surprised that cryptocurrency was not included in Trump’s first remarks after taking office last week. Trump established a working group to write new crypto regulations and investigate a crypto stockpile in an executive order on Thursday. Meanwhile, the Securities and Exchange Commission (SEC) increased accounting instructions, which the sector claimed has impeded the use of crypto.
Thomas Puech, CEO of digital asset hedge fund Indigo, stated that riskier assets were also negatively impacted by the possibility of interest rates remaining higher for an extended period of time.
