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Highlights
- Digital assets are facing losses amid a global market upheaval.
- Bitcoin remains steady but struggles to break past previous highs.
- The rise of AI startup DeepSeek from China adds pressure on the market.
Digital assets have been experiencing losses as global markets face turbulence, triggered by the unexpected rise of DeepSeek, a Chinese artificial intelligence startup. This disruption has led to a broader selloff, raising concerns about the future of the crypto market following impressive gains in the previous year.
Bitcoin's Performance Amid Market Volatility
In the latest trading session, Bitcoin has shown stability, though it has faced a slight decline. It remains closely tied to broader stock market fluctuations, particularly the Nasdaq 100, which includes major US tech stocks. This correlation reveals Bitcoin's vulnerability to movements in equity markets. The rise of DeepSeek, with its open-source platform, has increased concerns about AI competition, especially as Chinese companies gain momentum. This has added to the uncertainty regarding tech stock valuations and their impact on crypto prices.
The Role of President Trump’s Executive Order
Despite the volatility in broader markets, Bitcoin continues to benefit from President Donald Trump’s executive order in favor of digital assets. His stance has been a crucial factor in providing some stability to the sector. Many believe that if the administration strengthens its pro-crypto policies, it could result in favorable conditions for Bitcoin and other digital assets, even if traditional market demand wanes. However, despite this support, Bitcoin has faced challenges in surpassing previous highs, suggesting a potential consolidation phase within a defined price range.
Bitcoin's Tight Link to Tech Stocks
A significant factor influencing Bitcoin’s movement is its close connection to US tech stocks. Bitcoin's performance is increasingly aligned with the tech sector, particularly the Nasdaq 100 index. The correlation coefficient between Bitcoin and the Nasdaq 100 remains high, indicating that both markets are moving in the same direction. As a result, Bitcoin’s price is highly susceptible to shifts in the stock market, with both sectors being affected by similar concerns, such as tech stock valuations and growth prospects.
A Pullback in the Digital Asset Market
Certain segments of the digital asset market are already experiencing deeper pullbacks. An index tracking the bottom half of the top 100 digital assets has seen notable declines since the start of the year. This suggests that not all digital assets are faring well under current market conditions. While Bitcoin remains relatively steady within a specific price range, other digital assets are experiencing greater losses, leading to questions about the sustainability of the broader market rally.
Despite these challenges, Bitcoin’s price range of around US$90,000 to US$110,000 is likely to persist for the time being as the market consolidates, awaiting further clarity on growth and market sentiment.
