Market News

By Suvashree Ghosh

(Bloomberg) -- Bitcoin and other cryptocurrencies tumbled, following technology stocks lower, as the emergence of a new Chinese artificial-intelligence model triggered a global selloff in riskier assets. 

The original cryptoasset fell as much as 6.5% to below $100,000 on Monday, the biggest intraday drop since Dec. 6, before paring its loss in half and trading at about $101,500 as of 10:54 a.m. in New York. Smaller tokens suffered even deeper losses, with XRP sliding as much as 14% and Solana dropping 11% before both trimmed their declines. The crypto slide mirrored weakness across most equity markets, with US technology stocks leading declines. 

Bitcoin’s correlation to technology stocks has risen this year, meaning the two asset classes are moving more in lockstep, after the successful launch of exchange-traded funds that buy the token and Donald Trump’s embrace of the industry boosted crypto prices last year. Traders have so far shrugged off President Trump’s executive order to support the industry, issued shortly after he returned to the White House last week, with some arguing that prices already reflected the move. Concerns that Chinese startup DeepSeek’s AI model will hit tech valuations added to the risk-off mood in crypto on Monday. 

“The Chinese LLM poses a potential threat to US equity markets by disrupting US AI dominance with their cost efficiency and groundbreaking open-source technology,” QCP Asia said in a report on Monday, referring to so-called large language models. “Now the question is how will Trump retaliate?”

The slump comes after the president on Friday ordered the creation of a working group to advise the White House on crypto policy in a long-awaited executive action. The group is tasked with proposing a regulatory framework for digital assets in the US within six months, while evaluating the creation of a crypto stockpile. The order stopped short of confirming that the US would establish a Bitcoin stockpile — something Trump had vowed to do on the campaign trail. 

“Even though the market got 90% of what it wanted with the executive orders, it evidently was mostly priced in,” said Sean McNulty, head of APAC derivatives at digital-asset prime brokerage FalconX. Anything short of a stockpile plan “that immediately started buying BTC was going to disappoint,” he added. 

The digital-asset market took the order largely in stride on Jan. 24, posting modest gains in its aftermath. Bitcoin surged more than 50% since Trump’s election victory in early November. Trump used to be a crypto skeptic but had a change of heart on during the campaign, in part as the industry ramped up its involvement in the election through sizable political donations. He has pledged to make the US the world’s crypto capital and in December named venture capitalist David Sacks as artificial intelligence and crypto czar. 

The Republican’s embrace of the sector was on full display in the days leading up to his inauguration on Jan. 20, when he and his wife Melania launched memecoins — highly volatile tokens with questionable intrinsic value. The president’s token, known as TRUMP, was down 6% on Monday.

“After a string of bullish news — like pro-crypto regulatory appointments, new ETF product filings, and executive orders — the market seems to be catching its breath,” said Justin d’Anethan, head of sales at Liquifi, a token launch advisory firm. 

Concerns that DeepSeek may disrupt the technology world have “cascaded across futures and into digital assets,” according to Jonathan Yark, senior quant trader at market maker Acheron Trading. 

(Updates market action throughout.)