Bitcoins
- Bitcoin experienced a 9.8% decline from its recent all-time high of US$109,590, dropping briefly below US$100k in response to market fears surrounding Chinese AI developments.
- The DeepSeek AI model’s cost-effective performance triggered broader market concerns, particularly affecting tech stocks like Nvidia which saw a 17% decline.
- Analysts at 10X Research remain optimistic about Bitcoin’s prospects, suggesting the shift from tech to financials could drive BTC to US$150k-$190k this cycle as the stronger US dollar benefits domestic markets.
Just a week ago Bitcoin made a new all-time high (ATH) at US$109,590 (AU$174,746), but has since struggled to keep up the momentum.
At the time of writing BTC has dropped to US$101,885 (AU$162,421) after yesterday spending some time below US$100k. In fact, the OG crypto dropped as low as US$97,906 (AU$156,074), a 9.8% drop from its ATH.
Bitcoin Price Reacts to AI News
Bitcoin, and the whole crypto market, reacted to fear in the broader market over artificial intelligence (AI) news out of China.
Related: XRP’s Bullish Burst: Analyst Forecasts a Surge to $8 Amid Optimistic Market Cycle
The sell-off came as Chinese AI model DeepSeek raised doubts about massive investments in AI-tech companies. Vey-Sern Ling, managing director at Union Bancaire Privee said the model’s success could be trouble for “the entire AI supply chain, which is driven by high spending from a small handful of hyperscalers”.
DeepSeek shows that it is possible to develop powerful AI models that cost less.
Vey-Sern Ling, managing director at Union Bancaire Privee
The release of the new large language model has caused US markets to fall, with the largest losses observed in big tech stocks, especially the “Magnificent Seven”. Nvidia was particularly affected, experiencing a 17% share drop.
However, analysts at 10X Research said the crash doesn’t really matter to Bitcoin and can, in fact, be a good thing.
Bitcoin to Flourish Despite AI Worries
They see the US shift from tech towards financials, especially “as many AI systems lack clear guidance on potential profit generation”.
NVIDIA’s stock has moved sideways since June last year, and Apple’s highly anticipated AI upgrade cycle has been “just around the corner” for years. Meanwhile, inflation appears to be holding steady for now.
10X Research
The analysts wrote that Trump’s focus on the domestic economy is really a move from the tech sector towards financials which is “further reflected in the stronger U.S. dollar”.
Related: CME Says XRP, SOL ETF Leak an Error, Bitwise Files Dogecoin ETF
They argue that a stronger US dollar benefits American companies focusing on domestic markets rather than those, like many tech firms, that are driven by exports and earn significantly overseas.
Additionally, cutting back on AI spending supports US stock returns through continued share buybacks and helps reduce inflation, which in turn slightly softens the Federal Reserve’s aggressive monetary policy stance, as per the 10X analysts.
Which, ultimately could be a good thing for Bitcoin. Medium to long-term, Markus Thielen, the founder and CEO of 10X Research, believes that the price per coin could be at a solid US$150k (AU$239k) to US$190k (AU$303k) during this cycle.
Aaron Feuerstein Read More