Bitcoin’s recent drop below its key support level over the past week triggered a massive liquidation in the crypto market, with analysts warning of a potential further correction ahead.
Bitcoin’s (BTC) price recorded a sharp drop of nearly 5.5% over the past day, falling below the $100k support level for the first time since President Donald Trump’s inauguration on Jan. 20. The leading cryptocurrency’s price plunge coincided with a broader downturn in the crypto market, which declined by 8% during the same period.
Major cryptocurrencies, including Ethereum (ETH), XRP (XRP), Solana (SOL), Dogecoin (DOGE), and Cardano (ADA), experienced even greater losses, ranging between 9% and 17%.
Amid the market bloodbath, closely followed crypto trader and former BitMex CEO Arthur Hayes warned in a Jan. 27 X post of a looming ‘mini financial crisis’ that he believes could lead to a Bitcoin correction to $70k-75k level.
The experts’ commentary came as Bitcoin’s recent price drop triggered an $854.39 million mass liquidation event, wiping out nearly $794.5 million in leveraged long positions within 24 hours per data from CoinGlass.
Markets reeled after the debut of China’s AI app, DeepSeek, which has sent shockwaves through the tech and crypto space. Aimed at rivaling U.S.-made ChatGPT, DeepSeek skyrocketed to the top of the Apple App Store’s free app rankings, all on a modest $10 million budget—a stark contrast to ChatGPT’s significantly higher budget.
According to market analyst Adam Kobeissi, the launch of DeepSeek has likely spooked traders, leading to the recent crash.
“Risk-off is the theme as DeepSeek scares investors,” he wrote in a Jan. 27 X post.
Bitcoin’s recent price correction has also been fueled by an uptick in profit-taking. According to analyst Ali Martinez, long-term Bitcoin holders have reduced their holdings by over 75,000 BTC in the past week.
Georgii Verbitskii, founder of TYMIO, disagreed with Hayes, arguing that the recent sell-off is a cool-off following the crypto market bull run that began after Trump’s presidential win.
“The recent Bitcoin price dip is, in my opinion, a natural cooling off after the exciting rally that began on November 5th. While some market players like Arthur Hayes are predicting a correction to $75k, I don’t share that expectation—Bitcoin’s fundamentals remain strong,” Verbitskii told crypto.news.
According to him, if Bitcoin keeps trading under the $100k psychological resistance level over the coming week, a more modest correction to $87k could be on the horizon.
“As long as the underlying fundamentals stay intact, I believe this correction is just a part of the broader market cycle,” he added.
