The crypto market experienced a wave of drastic adjustments today. The price of Bitcoin fell below $98,000 at one point and is now trading at $98,909, a 24-hour drop of more than 6.3%. Ethereum fell more than 8% during the day, approaching $3,000. The altcoin market fell sharply, and many of them almost wiped out all the gains of the second round of the bull market, triggering market panic.
DeepSeek caused an earthquake in the US technology circle, and US stocks fell across the board
Recently, Chinese AI startup DeepSeek has released two large models, DeepSeek-V3 and DeepSeek-R1, which have performance comparable to OpenAI, but at a very low cost compared to the current highly valued AI companies in the United States. Concerns that DeepSeek may disrupt the market, especially doubts about the future prospects of technology giants such as Nvidia, have triggered bearish sentiment among investors and dragged down the entire market. U.S. stock index futures plunged in early Asian trading on Monday, and further spread to the crypto market.
The yen rate hike carry trade ends and global asset liquidity tightens
In addition to AI competition, the market generally believes that another factor exacerbating market volatility is Japan's interest rate hike policy. Last August, Japan raised interest rates from 0.1% to 0.25%, causing a flash crash in global financial markets. Japan raised interest rates again last Friday, raising interest rates to 0.5%, and higher interest rates are ending the yen carry trade. Previously, many investors invested money in global asset markets by borrowing low-interest yen for carry trades. As Japan's interest rates increased, borrowing costs rose, the attractiveness of carry trades was greatly reduced, and investors were forced to repatriate funds and sell previously held US dollar assets to repay loans. This change in capital flows has put double pressure on the US stock and crypto markets, further exacerbating market volatility.
The current crypto market is being affected by multiple internal and external factors, showing a significant correction trend. In this context, investors should remain calm and pay close attention to market dynamics to formulate reasonable investment strategies. At the same time, we still need to maintain a cautious and optimistic attitude towards the long-term development trend of the crypto market, and expect the market to seek new development opportunities amid fluctuations.
