Bitcoin Plummets as AI App DeepSeek Sparks Market Sell-Off

NEW YORK, NY — Bitcoin and cryptocurrency prices plunged sharply on January 27, 2025, as a stock market sell-off triggered by the surging popularity of China-based artificial intelligence app DeepSeek sent shockwaves through global markets. The bitcoin price fell below $100,000, down from its recent all-time high of nearly $110,000.

Arthur Hayes, co-founder of BitMex and a prominent crypto trader, warned of a looming “mini financial crisis” that could prompt the Federal Reserve to resume stimulus measures. “I am calling for a $70,000 to $75,000 correction in bitcoin,” Hayes posted on X, formerly known as Twitter. He predicted that such a crisis could ultimately drive bitcoin to $250,000 by year-end.

The sell-off comes amid heightened volatility in both crypto and traditional markets. DeepSeek, an AI app that rivals OpenAI’s models with fewer hardware requirements, has surged to the top of app stores, raising concerns about its impact on U.S. tech giants. “Risk-off is the theme as DeepSeek scares investors,” said market analyst Adam Kobeissi, noting that Nasdaq 100 futures dropped 330 points in hours.

Bitcoin’s decline follows a rally fueled by President Donald Trump‘s November 2024 election victory, which saw the cryptocurrency surpass $70,000. Last week, Trump announced plans to overhaul crypto policy, including the creation of a working group to explore new regulations and a national cryptocurrency stockpile.

Meanwhile, the Federal Reserve is expected to leave interest rates unchanged at its upcoming meeting, despite Trump’s calls for rate cuts. “With oil prices going down, I’ll demand that interest rates drop immediately,” Trump told attendees at the World Economic Forum.

The broader market downturn has also affected other cryptocurrencies, with Ethereum rival Solana dropping 10%. Analysts attribute the sell-off to investor fears over DeepSeek’s rapid rise and its potential to disrupt the tech sector.

As the crypto market braces for further turbulence, Hayes remains optimistic about bitcoin’s long-term prospects. “Money printing will send [bitcoin] to $250,000 by the end of the year,” he predicted, citing the Fed’s likely response to a financial crisis.