Bitcoin’s recent plunge below $100,000 sparked concerns among crypto investors. The decline, which was part of a broader tech stocks’ sell-off triggered by Chinese startup DeepSeek’s AI model challenging the US dominance in AI, also had enterprises such as Nvidia losing substantial market value.
Even as Bitcoin is not directly related to DeepSeek’s AI model, its price movement is often linked to tech stocks with analysts point out a significant correlation between indices such as the Nasdaq Composite and Bitcoin, indicating that big movements in tech sector may have an impact on Bitcoin’s price.
On January 20, DeepSeek had launched its newest open-source AI model Deepseek-R1 that rivals the US AI models such as OpenAI’s ChatGPT when it comes to conversational models to understand and generate human-like text. The DeepSeek model has received widespread acclaim, achieving top rankings on the US Apple App Store.
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Despite the initial fall on Monday evening, the cryptocurrency was resilient, recovering to above $103,000 on Tuesday morning. At the time of filing this report, Bitcoin was trading at around $102,144, as per Coinmarketcap.com.
The current drop in Bitcoun, however, seems to be more related to broader market sentiment around DeepSeek instead of issues intrinsic to Bitcoin itself.
According to Nigel Green, CEO of the global financial advisory firm Devere Group, the fluctuation in Bitcoin needs strategic thinking rather than panicking.
“This is not the time for panic; it’s a time for perspective. Bitcoin’s fundamentals remain as strong as ever, and history has shown us that such moments of volatility often create the most significant opportunities for forward-thinking investors,” Bitcoin.com News quoted Green as saying, stressing on the coin’s long-term prospects.
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“Short-term dips don’t deter long-term institutional players. They see bitcoin as a strategic asset in portfolios, one that hedges against inflation, diversifies risk, and offers growth potential,” he said.
For the uninitiated, Bitcoin has a history of bouncing back from different market downturns. For example, during the 2017-2018 ICO bubble burst, Bitcoin dropped to under $3,500 in December 2018, falling from over $17,000 peak in January 2018 and gradually recovering to over $19,000 in December 2020.
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