Bitcoin and most altcoins plunged on Monday, continuing a downward trend that has persisted since Donald Trump’s inauguration.
Bitcoin (BTC) fell to a low of $97,855, declining by about 10 percent from its high earlier this month. Other major laggards in the crypto industry included popular names such as Fartcoin, Raydium, Pepe, and Virtuals Protocol, which each dropped by over 20%.
Many of these coins are trading significantly below their monthly highs. Fartcoin, a popular meme coin on the Solana (SOL) network, has dropped by 63% from its peak this month. Raydium, the largest decentralized exchange on Solana, has fallen by 20%, while Pepe has declined by nearly 40%.
The first main reason for the crash is the fact that investors have embraced a risk-on sentiment following DeepSeek’s success. This also explains why major stock market indices like the Dow Jones, Nasdaq 100, and S&P 500 have fallen by over 2%.
DeepSeek, a Chinese competitor to Anthropic’s Claude, ChatGPT, and xAI, was developed in less than four months and at a fraction of the cost. Its success has raised concerns about future demand for high-priced chips from companies like NVIDIA and AMD, as well as broader market valuations.
Second, Bitcoin and altcoin prices have dropped as the market anticipates the Federal Reserve’s upcoming interest rate decision. Economists expect the Fed to maintain a hawkish tone due to elevated inflation levels. A report earlier this month revealed that the headline Consumer Price Index rose from 2.7% in November to 2.9% in December.
Bitcoin and other cryptocurrencies often react negatively to a hawkish Federal Reserve stance, as it typically results in higher bond yields.
Third, the declines are also being driven by anticipation of earnings reports from major technology companies, including Microsoft, Amazon, Meta Platforms, Apple, and Tesla. Weak financial results from these firms could have a negative impact on both the stock and crypto markets.
Bitcoin price chart pattern points to more downside
The daily chart shows that Bitcoin’s price has formed a double-top chart pattern at $108,310, with the neckline at $90,000. A double-top is widely regarded as one of the most bearish patterns in technical analysis.
On the positive side, Bitcoin remains above the 50-day and 100-day moving averages, indicating that the overall bullish trend is still intact. However, the bearish outlook will persist as long as the price stays below the double-top level of $108,310.
