DeepSeek Rout Costs Bitcoin Bulls $100K: 5 Things to Know This Week

Bitcoin has started the last week of January on a shaky note, dropping below the critical $100,000 mark as global markets grapple with uncertainties. From a stock market rout triggered by a Chinese AI startup to looming Federal Reserve decisions, here are five key developments shaping Bitcoin and the broader financial landscape this week.

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1. Bitcoin Price Drops Below $100,000 Amid Stocks Sell-OffBitcoin denied bulls a historic weekly close as its price fell by up to 4% on January 27, reflecting declines in U.S. stock futures. The drop took Bitcoin to ten-day lows, with popular traders pointing to the $90,000 range as a potential target for liquidity. Despite the dip, traders remain cautiously optimistic, citing mid-term price range stability and the potential for higher lows.

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2. Federal Reserve Rate Decision Adds Macro TensionThe Federal Reserve’s Federal Open Market Committee (FOMC) meeting this week is set to determine the future of interest rates. While recent inflation data has shown improvement, the market consensus suggests that the Fed is unlikely to implement further rate cuts this month. The outcome of the FOMC meeting and Fed Chair Jerome Powell’s press conference are expected to influence market sentiment significantly.

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3. DeepSeek Disrupts U.S. Tech StocksChinese AI startup DeepSeek has disrupted global markets, posing a challenge to established AI leaders like ChatGPT. The sudden rise of DeepSeek sent shockwaves through U.S. tech stocks, with Nasdaq futures plummeting 2% and investors fearing a $1 trillion loss in market value. DeepSeek’s popularity, bolstered by its affordability and user benefits, has raised concerns among investors, especially in large-cap tech stocks heavily reliant on AI developments.

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4. Derivatives Markets Reflect Bearish SentimentBitcoin’s derivatives markets have shown bearish sentiment, with the spot-perpetual price gap on Binance reflecting cautious trading behavior. This bearish stance contrasts with spot market confidence, creating a pricing disparity. Analysts suggest that improving macroeconomic conditions or positive outcomes from the FOMC meeting could restore confidence and bring derivatives sentiment in line with spot markets.

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5. Key Support Levels for Bitcoin in FocusWith Bitcoin back below $100,000, attention has turned to crucial support levels. Short-term holders (STHs) risk entering unrealized loss territory at the $96,000 price point, while the $90,000 level represents a more significant technical and on-chain support zone.

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Analysts suggest that price movements around these levels will be critical to determining market sentiment in the near term.While Bitcoin’s price decline may appear concerning, the market remains in a consolidation phase, with long-term investors reducing exposure and short-term holders entering the market. These dynamics, combined with macroeconomic developments, will likely shape Bitcoin’s trajectory in the coming weeks.Disclaimer: This article does not constitute investment advice. Readers are encouraged to conduct their own research before making any financial decisions.