Bitcoin drops with US stocks at the start of FOMC week amid a perceived threat from Chinese AI sensation DeepSeek.
Bitcoin
BTC
$99,087
breaks below $100,000 to start the last week of January as US stocks feel the heat from an AI showdown.
BTC/USD takes a turn for the worse as stocks futures tumble, sparking a new BTC price crash warning.
The downside comes at an already tense time for risk assets with the Federal Reserve due to decide on interest rate changes.
The rise of Chinese AI startup DeepSeek sends shockwaves through markets as doubts arise over ChatGPT competitiveness.
Bitcoin derivatives markets look increasingly understandable for their cautious stance in recent weeks.
Short-term holders risk revisiting key price levels which would send them into unrealized loss.
BTC price drops with stocks to start tense week
Bitcoin denied bulls both a historic weekly close and a strong start to the last week of January as a US stocks rout spilled over into crypto markets.
Responding, traders appeared cool, stressing that the mid-term BTC price range remained intact.
“$BTC is simply heading down to one end of our range that we’ve been trapped in for the last week,
nothing to be freaking out about,” popular trader Credible Crypto wrote in part of his latest post on X.
“In fact I’m glad we’re going for the lows first because it’s healthier for us to take liquidity from the lows of this range while leaving liquidity behind at the highs.”
“Either SFP this current low, or land into the daily untapped demand + yearly open. My line in the sand. … Losing the low that printed the latest ATH wouldn’t be a great look.”
Some, however, felt a sense of foreboding, among them Arthur Hayes, former CEO of crypto derivatives platform BitMEX.
Giving X followers a taste of his forthcoming blog post, Hayes claimed that BTC/USD could see a giant $75,000 crash before heading to a quarter of a million dollars per coin by the end of 2025.
FOMC offers little chance of interest rate cut
The Federal Reserve dominates the macro radar this week as officials decide the future path of interest rates.
The Federal Open Market Committee (FOMC) is widely expected to pause an incremental rate-cutting spree that began in mid-2023 due to inflation markers rebounding across the board.
The latest estimates from CME Group’s FedWatch Tool put the odds of even a small 0.25% cut on Jan. 29 at just 0.5%.
FOMC will be accompanied by a speech and press conference from Fed Chair Jerome Powell, himself under pressure from US President Donald Trump, who expects rates to drop.
“With oil prices going down, I’ll demand that interest rates drop immediately, and likewise they should be dropping all over the world,” he told the World Economic Forum in Davos, Switzerland last week, quoted by Reuters and others.
In a press conference, Trump confirmed that he assumed Powell would listen to his request.
Fresh inflation data will come thick and fast in the coming days, meanwhile, with Q4 GDP and the latest print of the Personal Consumption Expenditures (PCE) Index, the latter known as the Fed’s “preferred” inflation gauge, both due.
“Are you ready for a huge week ahead?” trading resource The Kobeissi Letter thus responded in one of its latest X threads.
DeepSeek comes for ChatGPT — and US stocks sentiment
A sudden sharp shock for US stocks sets a firmly nervous tone for the week’s first Wall Street trading session.
Nasdaq futures plummeted 2% on Jan. 27, with Kobeissi noting that US stocks on aggregate risk shedding $1 trillion in value at the open.
The reason, it suggests, is the sudden rise of Chinese AI startup DeepSeek, now vying for supremacy with ChatGPT after appearing “out of nowhere.”
“Needless to say, investors in large-cap US tech are worried,” it explained in a dedicated X thread on the topic.
“The Magnificent 7 stocks are trading ~2 standard deviations above levels seen in 2001 compared to global equities. Much of the bull market over the last 2 years has been on the basis of AI hardware and software.”
