Bitcoin Drops Below $100,000 as Chinese AI Model Triggers Market Selloff

Bitcoin took a hit on Monday, dropping 6.5% and falling below $100,000. This is the largest drop in Bitcoin’s price since early December. Other cryptocurrencies like XRP and Solana also saw major losses, with XRP down 9%. This sharp decline followed a larger downturn in U.S. tech stocks, particularly in futures markets like Nasdaq and S&P 500.

New Chinese AI Technology Stirs Up Concern

The sudden market drop is largely due to the release of DeepSeek, a new AI model developed by a Chinese startup. Experts say DeepSeek’s ability to match top AI systems while being more cost-effective could pose a serious challenge to U.S. tech companies. If this new AI model gains traction, it could lower the value of U.S. tech stocks, and investors are concerned that its impact will be felt in the crypto market as well.

The news has rattled traders, especially in the crypto sector, as these markets are particularly sensitive to technological shifts. QCP Asia, a trading firm, noted that DeepSeek’s efficiency could disrupt the business models of major U.S. companies, which could cause further instability in the markets.

Trump’s Executive Order Fails to Lift Market Sentiment

Even though President Trump recently signed an executive order aimed at shaping U.S. cryptocurrency policy, the market response was tepid. The order created a task force to regulate the industry, but it did not include the Bitcoin reserve that some had hoped for.

Investors had expected a more immediate and significant action, such as the establishment of a government-backed Bitcoin reserve. “Without a clear, decisive move like a Bitcoin reserve, the market wasn’t going to react positively,” said Sean McNulty, head of APAC derivatives at FalconX.

Tech and Crypto Markets Face Uncertainty

Despite the executive order’s emphasis on crypto, DeepSeek’s introduction is casting a long shadow over tech and cryptocurrency markets. Investors had hoped Trump’s policy actions would push the markets higher, but the fears around disruptive AI technology seem to be dominating sentiment right now.

As of Monday morning, Bitcoin’s value was around $99,200, and analysts will be closely watching for any developments in both the AI sector and cryptocurrency regulation that could shift market trends.

Also Read: The Future of Money: Bitcoin, Solana, and Dogecoin Shaping Cryptocurrency Trends