Bitcoin (BTC) fell below $99,000 early Monday as traders took profits ahead of the first U.S. FOMC meeting this year, scheduled for later this week, and AI mainstay China-based Deepseek has impacted sentiment in the US tech sector.
Traders are not expecting any indication of a rate cut at the two-day FOMC meeting scheduled for Jan. 28-Jan. 29, which has generally impacted bitcoin prices as investors prefer or move away from risky assets.
“US economic data shows there may be less need for a federal interest rate cut in the near term,” Ben El-Baz, managing director of Hashkey Global, told Coindesk in a telegram message.
“Concerns over trade wars and tariffs persist, but bullish sentiment remains strong as Microstrategy and the world of Trump Liberty Financial continue to buy crypto.”
BTC is down almost 6% from a Sunday high of over $105,000, with a steep decline ahead as Asian markets opened on Monday. This came despite a major catalyst on Friday, when US President Donald Trump ordered the creation of a crypto policy group to advise and lead the country’s industry within six months.
The crypto market cap fell by 8%, while the broad Coindesk 20 (CD20) fell by over 8.14%.
The drop followed a fall in U.S. stock indexes – which Bitcoin moves tend to mirror – with futures on the S&P 500 and NASDAQ 100 up 2.15% on Monday before the market opened.
Much of the concern stems from possible overvaluation in US tech companies, as Deepseek’s latest AI model is much cheaper to produce and was built using easy-to-use open-source technology. ‘access.
As Coindesk reported on Monday, Deepseek’s data published on Hugging Face, an AI industry forum, shows its model outperforms OpenAI, while being built on a $6 million budget. dollars and a fraction of the graphics processing units (GPUs) that OpenIAi uses – which recently closed a $6.6 billion round with a valuation of over $157 billion.
OpenAI has previously applied for billions of dollars in funding to build large-scale AI systems and is part of the new US Stargate project, which has attracted $500 billion in investment and includes Trump Softbank and Oracle, to build centers of AI data in the country.
However, Deepseek’s reported costs and features threaten the established narrative of requiring vast computing resources for AI innovation, reducing the competitive edge of U.S. tech companies, and calling into question the sustainability of their lofty valuations – which has a broader impact on market sentiment and bitcoin in the near term.
As such, traders loaded up $95,000 strike options for Bitcoin to protect against the downside ahead of the week, indicating that expectations of a lower move remain prevalent in the market.
“The desk observed growing interest in the $95,000 strikes in January as the market rushed for downside protection after BTC lost momentum during yesterday’s US session,” traders said from Singapore-based QCP Capital in a Saturday show.
“Without major catalysts ahead of next week’s FOMC meeting, the market is likely to remain range bound until there is more clarity on how the recent weak CPI reading influenced policy decisions coming from the Fed,” QCP added at the time.
