Bitcoin Plunge Sparks $855 Billion Liquidations: DeepSeek AI Market Shock
Bitcoin took a nosedive below the $100,000 mark, triggering a massive $855 billion in liquidations as the market was rocked by Deepseek AI’s impact. The sudden drop during Asian trading hours sent shockwaves through the broader crypto and stock markets, with the Nasdaq 100 futures plummeting over 2%.
The Decline and Recovery
According to data from CryptoSlate, Bitcoin saw a sharp decline of over 6% in the last 24 hours, dropping to as low as $97,000 before clawing its way back up to $99,290 at the time of reporting. This downward spiral marked the end of the bullish momentum that had propelled Bitcoin to its all-time high of $109,000 prior to Donald Trump’s inauguration as US President.
Expert Predictions and Analysis
Arthur Hayes, co-founder of BitMEX, painted a bleak picture, predicting further declines with Bitcoin potentially dipping to the $70,000-$75,000 range in the short term. However, he remains optimistic about the long-term prospects, forecasting a price surge to $250,000 by the year’s end. Hayes cited potential financial instability and monetary easing as key drivers for this bullish outlook.
Marketwide Impact
The ripple effect of Bitcoin’s decline was felt across other major cryptocurrencies, including Ethereum, BNB, Solana, XRP, Dogecoin, and Cardano, all of which saw losses of up to 9%. This widespread caution permeated the entire market, reflecting investor unease.
Stock Market Turbulence
The turmoil in the crypto market spilled over into US stock indices, with Nasdaq 100 futures taking a hit of over 2%. The Kobeissi Letter estimated potential losses of $1 trillion in US equity markets, underscoring the magnitude of investor anxiety. The surge in popularity of DeepSeek, a Chinese AI company, added to the apprehension as it climbed to the top spot in the App Store, raising concerns about its impact on major US tech firms.
Liquidation Frenzy
The market volatility set off a flurry of liquidations, with data from CoinGlass revealing a staggering $855 billion wiped out, affecting more than 313,000 traders. Long traders, banking on price hikes, bore the brunt of the losses, totaling $794 billion, while short traders, anticipating price drops, lost around $59 million. Bitcoin traders faced significant setbacks, with liquidations totaling $259 million, including a $247.5 million hit from long positions.
In conclusion, the recent plunge in Bitcoin’s price and the subsequent market chaos serve as a stark reminder of the fragility and interconnectedness of the global financial landscape. As investors navigate these turbulent waters, the long-term outlook remains uncertain, yet filled with potential for those willing to weather the storm.