Bitcoin dropped below $100,000 on Monday, reaching an 11-day low, with analysts linking the decrease to caution following the rising popularity of a Chinese artificial intelligence model that triggered a sell-off in AI-related stocks in the West.
The world's largest cryptocurrency faced challenges in gaining traction last week, after a strong rally following U.S. President Donald Trump's election plateaued.
By 1156 GMT, bitcoin was priced at $98,852.17, marking a approximately 6% decline for the day, plunging sharply in early trading to hit its lowest level since Jan. 16.
Concerns among traders about the potential impact of Chinese AI startup DeepSeek on Western firms' position in the sector fueled unease among technology stocks, likened by some to AI's "Sputnik moment", echoing the pivotal historical event of the launch of a Soviet satellite in the late 1950s that sparked the space race.
According to eToro analyst Simon Peters, the retreat in Bitcoin's value appeared to be linked to a broader shift towards risk aversion triggered by DeepSeek.
Geoffrey Kendrick, head of digital asset research at Standard Chartered, highlighted that declines in Nasdaq futures had a negative impact on cryptocurrency markets, compounded by disappointment over the Trump administration's announcement regarding a potential cryptocurrency reserve, which increased the vulnerability of digital assets to a significant sell-off.
The absence of any mention of cryptocurrency in Trump's initial policy announcements upon assuming office last week left some investors underwhelmed. Trump's executive order on Thursday establishing a task force to devise new cryptocurrency regulations and explore the creation of a cryptocurrency reserve, combined with the SEC's reversal of accounting guidelines perceived as impeding crypto adoption, contributed to the market uncertainty.
Thomas Puech, CEO of digital asset hedge fund Indigo, noted that expectations of prolonged high-interest rates also weighed on riskier assets.
Federal Reserve policymakers are slated to convene this week, with the expectation that they will maintain current policies.