Today, the crypto market experienced a significant downturn, with Bitcoin (BTC) leading the decline. As of the latest data, Bitcoin is trading at $100,464.72, marking a 2.10% drop from its previous close. This decline is part of a broader market trend that has seen major cryptocurrencies and tech stocks alike facing downward pressure.
The Crash: What Happened?
The recent drop in BTC and the broader crypto market seems to be influenced by a mix of events. Here are the key factors:
Source | Tradingview
- Market Reaction to DeepSeek’s Rise
A Chinese AI startup, DeepSeek, has taken the news by storm, emerging as a direct competitor to U.S.-based AI leaders. This has caused tech-heavy markets like the Nasdaq 100 to fall sharply, and the effects are spilling over into crypto markets. Investors are increasingly nervous about the growing competition between U.S. and Chinese tech sectors.
- Upcoming Macro Events
This week is packed with important U.S. economic reports and Federal Reserve announcements. Traders are adjusting their positions ahead of Wednesday’s FOMC interest rate decision, which could influence the direction of riskier assets like cryptocurrencies.
Key Events to Watch This Week
Monday, January 27
- New Home Sales Report (10:00 AM ET): A stronger-than-expected report could signal a resilient economy, potentially impacting broader markets.
Tuesday, January 28
- Durable Goods Orders (8:30 AM ET): Insights into December’s manufacturing activity could shape investor sentiment.
- Consumer Confidence Index (10:00 AM ET): Expected to show a slight increase, this will highlight consumer optimism as the year begins.
Wednesday, January 29
- FOMC Interest Rate Decision (2:00 PM ET): This is the week’s highlight. Expectation is that rates will stay the same, inherently bearish for the market in the short-term. But this decision is expected. According to FEDWatch, there is a 99.5% probability rates will stay the same.
Source | CMEGroup
- Fed Chair Powell’s Press Conference (2:30 PM ET): Powell’s comments on inflation and risks will be closely watched.
Thursday, January 30
- Q1 GDP Report (8:30 AM ET): With a forecasted 2.5% growth, this report may give clues about the economy’s strength and the Fed’s future actions.
- Initial Jobless Claims (8:30 AM ET): Job market strength could solidify expectations of further rate hikes.
Friday, January 31
- Core PCE Index (8:30 AM ET): A key inflation measure. If it’s lower than expected, crypto markets could rally.
- Chicago PMI (9:45 AM ET): This index will provide updates on business activity for January.
Crypto-Specific Catalysts
- dYdX Token Unlocks (February 1)
Over 8.33 million DYDX tokens (1.15% of supply) will be unlocked. This could lead to price fluctuations as traders anticipate increased supply. - Sui Token Unlocks (February 1)
A significant 2.13% of SUI’s circulating supply will hit the market. Traders are keeping a close eye on potential supply pressure. - Uniswap V4 Deployment (February 2)
The upcoming launch of Uniswap’s V4 contracts could drive renewed interest in UNI and its ecosystem. - Hedera Live Interview (Today, 3 PM UTC)
Hedera’s leadership will discuss plans for global tokenization. While it may attract attention, the impact on HBAR’s price will depend on actionable insights. - Optimism (OP) Token Unlock (January 31)
Optimism will unlock approximately 31.34 million OP tokens, representing 2.32% of its circulating supply. This unlock may moderately impact OP’s price.
The Bottom Line
Bitcoin’s recent drop reflects broader market uncertainty driven by economic events and tokenomics developments. However, the rise of DeepSeek could have continued effects throughout this week. This may even mark the start of the deflation of the AI bubble, a major development that traders should monitor closely. It’s a huge deal, so be sure to follow the news carefully.
This article is not financial advice. Always DYOR (do your own research) before making investment decisions. You can explore resources and insights at blog.millionero.com. To stay ahead of the market, come trade spot and perpetual contracts on Millionero.