Market Volatility and Crypto Outlook Amid AI Competition
A surge in volatility across global markets, sparked by the emergence of Chinese AI startup DeepSeek, has raised concerns for digital assets. The Nasdaq 100 Index's recent plunge triggered a 3% drop in Bitcoin's value.
DeepSeek's success has intensified competition in the AI sector, casting doubt on the sustainability of valuations for US tech stocks that rely heavily on innovation. This sentiment carries over to cryptocurrency, potentially dampening speculative enthusiasm.
Amidst concerns, Bitcoin's correlation with US tech stocks has remained high, indicating its vulnerability. A Bitcoin reserve ratio of 0.67 (with 1 being perfectly correlated and -1 being inversely correlated) further underscores the currency's linkage to Nasdaq 100.
Despite President Trump's supportive executive order and a retreat in the dollar gauge, Bitcoin has struggled to reach new highs. This raises questions about the longevity of the current bull market.
Trump's pro-crypto stance remains influential, with expectations of a national Bitcoin reserve potentially boosting its value. However, a broader market correction is underway, as evidenced by a decline in smaller digital assets.
Analysts predict that a range of $90,000 to $110,000 may hold for Bitcoin in the near term as the market consolidates.