Bitcoin’s recent drop below its key support level over the past week has caused a stir in the crypto market, triggering a massive liquidation and sparking concerns of a potential further correction ahead. The leading cryptocurrency, Bitcoin (BTC), experienced a sharp drop of nearly 5.5% in the past day, falling below the $100k support level for the first time since President Donald Trump’s inauguration on Jan. 20. This decline coincided with an 8% downturn in the broader crypto market, affecting major cryptocurrencies like Ethereum (ETH), XRP (XRP), Solana (SOL), Dogecoin (DOGE), and Cardano (ADA), which saw losses ranging between 9% and 17%.
Amidst the market turmoil, well-known crypto trader and former BitMex CEO Arthur Hayes raised concerns about a potential ‘mini financial crisis’ in a recent X post on Jan. 27. Hayes predicted a Bitcoin correction to the $70k-75k level, warning of further market turbulence ahead. The market reaction to Bitcoin’s price drop resulted in an $854.39 million mass liquidation event, wiping out nearly $794.5 million in leveraged long positions within a 24-hour period, as reported by CoinGlass.
The launch of China’s AI app, DeepSeek, added another layer of uncertainty to the market dynamics. DeepSeek, aimed at rivaling the U.S.-made ChatGPT, quickly rose to the top of the Apple App Store’s free app rankings on a modest $10 million budget, creating waves in the tech and crypto space. Market analyst Adam Kobeissi suggested that the launch of DeepSeek may have contributed to the recent market crash, with traders adopting a risk-off approach following the app’s debut.
Profit-taking also played a role in Bitcoin’s recent price correction, with long-term holders reducing their holdings by over 75,000 BTC in the past week, according to analyst Ali Martinez. While some experts, like Georgii Verbitskii, founder of TYMIO, view the sell-off as a natural cooling off after a bullish market run that began post-Trump’s presidential win, others express concerns about a more significant correction.
Verbitskii remains optimistic about Bitcoin’s fundamentals, suggesting that a correction to $87k could be on the horizon if the cryptocurrency continues trading below the $100k psychological resistance level. He emphasized the importance of monitoring the underlying market fundamentals to navigate through the current market cycle, highlighting the resilience of Bitcoin despite the recent price fluctuations.
In conclusion, the crypto market is experiencing a period of uncertainty and volatility, with experts offering differing perspectives on the potential outcomes. As traders and investors navigate through these turbulent times, staying informed about market developments and maintaining a long-term perspective on Bitcoin’s fundamentals will be key to weathering the storm.