- $920 billion wiped out of the crypto market due to AI, Fed policy, and tech sell-offs.
- Bitcoin falls below $100K as the crypto market faces tech-linked volatility.
- Fed’s interest rate stance dampens risk appetite, extending crypto losses.
Within the last 24 hours, a massive $920 billion was wiped out of the cryptocurrency market.
This decline is closely linked to a broader sell-off in the technology sector. The recent launch of a free, open-source AI model by Chinese startup DeepSeek has intensified competition in the tech industry, leading to substantial losses in U.S. tech stocks. This development has had a ripple effect on cryptocurrencies, which often move in tandem with tech equities.
Bitcoin, the leading cryptocurrency, fell below $100,000, reaching an 11-day low. Other major cryptocurrencies, including Ethereum, XRP, Solana, and Dogecoin, also faced significant declines. Analysts suggest that the high correlation between Bitcoin and tech stocks, particularly the Nasdaq 100, has fueled this downturn.
Additionally, market sentiment has been influenced by expectations regarding U.S. Federal Reserve policies. Investors are anticipating that the Federal Reserve will maintain higher interest rates for an extended period, which has historically led to a reduction in risk appetite across various asset classes, including cryptocurrencies.
It stands to reason that the substantial loss in the cryptocurrency market is primarily driven by a combination of intensified competition in the tech sector due to new AI developments and shifting expectations of U.S. monetary policy.
Related: USDC Reserves Activated: Could This Be the Last Market Shakeout?
What’s Next for the Crypto Market?
These upcoming few days are going to be interesting, to say the least.
The first of eight FOMC (Federal Open Market Committee) meetings this year is on the horizon, and considering that the U.S. Federal Reserve’s stance on interest rates heavily impacts speculative assets, the crypto world is eagerly awaiting the conclusion of the meeting.
Plus, if higher rates happen, that would generally discourage risk-taking, which could delay recovery.
That said, while the cryptocurrency market is volatile, it has demonstrated resilience after substantial downturns in the past.
Take, for example, the Mt.Gox crash of 2014 triggered a sell-off that pulled the BTC price down by 36%. A similar black swan event happened when Terra/Luna collapsed in 2022, bringing BTC down 50%, from 40k to 20k.
Related: Trump Returns, Bitcoin Waits: What FOMC 2025 Means for Crypto
Then, there were situations with bear markets, such as during the 2018 or the 2022 crash. Cryptocurrencies have recovered each time, albeit with varying timelines.
After the 2018 crash, it took Bitcoin nearly three years to reach new all-time highs. During the 2022 market collapse, Bitcoin rebounded in 2023 thanks to renewed interest in decentralized finance and institutional adoption.
While short-term recovery might be challenging, the market’s long-term trajectory could still point toward growth, driven by innovation, increased adoption, and greater financial integration.
Disclaimer: The information presented in this article is for informational and educational purposes only. The article does not constitute financial advice or advice of any kind. Coin Edition is not responsible for any losses incurred as a result of the utilization of content, products, or services mentioned. Readers are advised to exercise caution before taking any action related to the company.
