Bitcoin (BTC) dropped to less than $ 99,000 early Monday when traders made a profit ahead of the first US FOMC meeting this year, scheduled for later this week, and the Chinese-based Ai capable Deepseek influenced the mood of the US technology sector.
Merchants expect no indications of an interest rate reduction at the two-day FOMC meeting scheduled for January 28 to January 29, which has typically affected Bitcoin prices, as investors either prefer or move away from risk assets.
“US economic data shows that there may be less need for a federal interest rate reduction in the short term,” Ben El-Baz, CEO of Hashkey Global, told Coindesk in a telegram message.
“Concerns about trade wars and tariffs hang on, but a bullish mood remains strong, while Microstratey and Trump’s World Liberty Financial continue to buy crypto.”
BTC fell nearly 6% from a Sunday high of over $ 105,000, with a steep fall when the Asian markets opened on Monday. This happened despite a major catalyst on Friday when US President Donald Trump ordered the establishment of a cryptopolitan group to advise and operate the country’s industry within six months.
The crypto market value dropped 8%, while the widely based Coindesk 20 (CD20) fell more than 8.14%.
The fall traced a decrease in US stock indices – whose movements Bitcoin tends to reflect – with futures on the S&P 500 and NASDAQ 100 fallen as much as 2.15% Monday before the market opened.
Much of the concern stems from a possible overestimation in US tech companies, as Deepseek’s latest AI model is significantly cheaper to produce and was built using Open Source technology that is easy to access.
As Coindesk reported on Monday, data from Deepseek on Hugging Face, a forum for the AI industry, shows that its model surpasses Openai, while it is built on a budget of $ 6 million and a fraction of the graphic processes (GPUs), As Openai uses – which recently closed a round of $ 6.6 billion with a valuation of over $ 157 billion.
Openai has previously asked for trillion of dollars in funding to build AI systems on a large scale and is part of the new US project Stargate, which has attracted $ 500 billion in investment and includes Trump Softbank and Oracle, to build Ai- data centers in the country.
However, Deepseeks reported costs and features threaten the established narrative of needing huge calculation resources for AI innovation, potentially reducing competitive advantages for US technology companies and questioning the durability of their high values - affecting wider market mood and bitcoin in short term .
As such, traders of $ 95,000 read strike options for Bitcoin to protect against the disadvantages prior to the week, indicating that expectations of a decline continue to be prevalent in the market.
“The desk observed growing interest in Jan $ 95,000 strikes when the market distorted downward protection, after BTC lost momentum during yesterday’s US session,” Singapore-based QCP Capital said in a Saturday broadcast.
“Without any major catalysts before next week’s FOMC meeting, the market is likely to remain interval bound until there is more clarity on how the latest weak CPI reading has affected Fed’s upcoming political decisions,” QCP added at that time.
