Bitcoin (BTC) fell below $99,000 early Monday as traders took profits ahead of the first US FOMC meeting of this year, scheduled for later this week, and AI stalwart DeepSeek with based in China, affected sentiment in the US technology sector.
Traders expect no signs of a rate cut at the two-day FOMC meeting scheduled for Jan. 28-29, which has generally impacted bitcoin prices as investors shift toward or away from risk assets.
“US economic data shows that there may be less need for a federal interest rate cut in the near term,” Ben El-Baz, managing director of HashKey Global, told CoinDesk in a Telegram message.
“Concerns about trade wars and tariffs persist, but bullish sentiment remains strong as MicroStrategy and Trump’s World Liberty Financial continue to buy cryptocurrencies.”
BTC fell nearly 6% from a Sunday high of over $105,000, with a sharp decline when Asian markets opened on Monday. This came despite a major catalyst on Friday, when US President Donald Trump ordered the creation of a crypto policy group to advise and boost the country’s industry within six months.
The crypto market cap fell 8%, while the broad-based CoinDesk 20 (CD20) fell over 8.14%.
The drop followed a decline in US stock indices, whose movements bitcoin tends to mirror, with S&P 500 and Nasdaq 100 futures falling as much as 2.15% on Monday before the market open.
Much of the concern arises from a possible overvaluation of US tech companies, as DeepSeek’s latest AI model is significantly cheaper to produce and was built using easily accessible open source technology.
As CoinDesk reported on Monday, DeepSeek data published on Hugging Face, an AI industry forum, shows that its model outperforms OpenAI, all while being built on a $6 million budget and a fraction of the graphics processing units (GPUs) that OpenAI uses, which recently closed a $6.6 billion round at a valuation of more than $157 billion.
OpenAI has previously requested billions of dollars in funding to build AI systems at scale and is part of the new US project Stargate, which has attracted $500 billion in investments and includes Trump SoftBank and Oracle, to build AI data centers in the country.
However, DeepSeek’s reported costs and features threaten the established narrative that vast computational resources are needed for AI innovation, potentially reducing the competitive advantage of US tech companies and calling into question the sustainability of their high valuations, impacting sentiment further. broad market and Bitcoin in the short term.
As such, traders loaded $95,000 strike options for bitcoin to protect against the decline ahead of the week, indicating that expectations of a downward move remain prevalent in the market.
“The desk noted growing interest in January $95,000 strikes as the market sought downside protection after BTC lost momentum during yesterday’s US session,” traders at Singapore-based QCP Capital said in a Saturday broadcast.
“With no major catalysts ahead of next week’s FOMC meeting, the market is likely to remain range-bound until there is more clarity on how the recent weak CPI reading has influenced the Federal Reserve’s upcoming policy decisions. “QCP added at the time.
