Crypto market down 6.5% amid concerns over US AI
Market picture
The cryptocurrency market sometimes exhibits higher volatility compared to the Nasdaq index. On Monday, the cryptocurrency market decreased by 6.5% to reach $3.38 trillion, while the Nasdaq100 was down 2.5%. This was due to the emergence of the startup DeepSleek with its free AI. These concerns were heightened with the anticipation of this week's Fed meeting and profit-taking following crypto-related orders from President Trump.
Bitcoin fell 6.5% below $98,000 in early European trading. The price is testing its 50-day moving average again after spending 10 days above that level. If the market does not see a quick recovery and the sell-off continues, the next key support will be the $93,000 area - the lower end of the trading range of the last nine weeks and 61.8% of the rally since early November.
Ethereum has also been affected by the sell-off, falling to $3000 - the area of lows since November, and temporarily touching the 200-day moving average on Monday. A fall below this level would signal a potential trend change to bearish.
News background
According to SoSoValue, inflows into spot bitcoin ETFs in the US totalled $1.76 billion last week, compared to $1.96 billion a week earlier, bringing total inflows into these products to $39.94 billion.
Inflows into spot Ethereum-ETFs in the US totalled $139.3 million last week after $212 million a week earlier. Cumulative net inflows since the ETF's launch in July rose to $2.80 billion.
Since Trump's election, large investors have been backing bitcoin, CryptoQuant noted. Bitcoin holdings of large participants rose from 16.2 million BTC to 16.4 million BTC, while small participants reduced their holdings from 1.75 million BTC to 1.69 million BTC. Experienced investors avoided selling despite the high volatility.
The US SEC has cancelled the SAB 121 rule, which effectively banned banks from holding cryptocurrencies. This was Commissioner Hester Pearce's first initiative since her appointment as head of the regulator's Digital Asset Task Force.
The Nasdaq exchange has applied on behalf of BlackRock to change the structure of the iShares Bitcoin Trust (IBIT) to allow in-kind redemptions. This will enable investors to withdraw their funds in bitcoin, increasing the attractiveness of this ETF, Bloomberg notes.
Pierre Rochard, vice president of research at Riot Platforms, said that Ripple is a significant obstacle to the creation of a strategic cryptocurrency reserve in the United States. He believes the fintech company is interested in promoting CBDCs designed to run on its infrastructure.
In 2024, 36.2 million cryptocurrency wallets were created on the TON network - 55 times more than the previous year. The total number of Toncoin holders exceeded 100 million, the ecosystem developers reported.
Author
Alexander Kuptsikevich, a senior market analyst at FxPro, has been with the company since its foundation. From time to time, he gives commentaries on radio and television. He publishes in major economic and socio-political media.
