Bitcoin Drops Amid Market Volatility
Bitcoin tumbled on Monday, dropping 6.5% to below $100,000 before recovering to $101,500. The crypto slide followed a global selloff in riskier assets, triggered by the emergence of a new Chinese artificial intelligence model. Smaller cryptocurrencies like XRP and Solana saw even steeper losses, with XRP falling 14% and Solana dropping 11%.
Correlation Between Bitcoin and Technology Stocks
Bitcoin’s correlation with technology stocks has grown stronger this year. The launch of Bitcoin-focused exchange-traded funds (ETFs) and Donald Trump’s pro-crypto stance boosted the token’s price last year. However, this increasing alignment means crypto prices are now more vulnerable to tech-driven market movements.
Trump’s Executive Order Sparks Debate
President Trump’s recent executive order to support the crypto industry created mixed reactions. While the order proposed a regulatory framework for digital assets, it stopped short of confirming a U.S. Bitcoin stockpile—a campaign promise that fueled market optimism. Analysts believe much of the executive order’s impact was already priced into Bitcoin’s recent rally.
Chinese AI Model Heightens Market Risks
The selloff in digital assets was also fueled by concerns over DeepSeek, a Chinese artificial intelligence model that threatens U.S. tech dominance. The advanced large language model (LLM) has sparked fears of disruptions in the technology sector, further unsettling crypto markets.
Bitcoin’s Resilience Amid Broader Uncertainty
Despite the current slump, Bitcoin has surged over 50% since Trump’s election victory. The president, once a crypto skeptic, now embraces the industry. His administration has taken steps to position the U.S. as a global crypto hub, with key regulatory appointments and increased political support from the sector.
Memecoins and Market Sentiment
In the lead-up to Trump’s inauguration, the launch of memecoins, including his token “TRUMP,” showcased the sector’s speculative nature. While the token fell 6% on Monday, experts believe the market is simply pausing after a series of bullish developments, including new ETF filings and regulatory progress.