Bitcoin Surges Amid Market Reactions to AI Breakthroughs
Bitcoin (BTC) experienced a remarkable uptick, reaching nearly $103,000, which set off a wave of gains across the cryptocurrency market on Tuesday. This surge followed significant developments from China’s DeepSeek, which contributed to a sharp decline in U.S. stock indexes on Monday, primarily fueled by investor concerns regarding the overvaluation of AI investments.
XRP led the charge among major cryptocurrencies, soaring by 12%, while other notable tokens such as Cardano’s ADA, BNB Chain’s BNB, Solana’s SOL, and Dogecoin (DOGE) climbed as much as 9%. Meanwhile, Ether (ETH) saw an increase of 4.5%, contributing to an overall market capitalization rise of 3%.
In the past 24 hours, BTC itself rose by nearly 4%, helping to mitigate losses from Monday, which witnessed over $1 billion in futures liquidations and an 8.5% decline in the broad-based CoinDesk 20 (CD20) at its peak. Such large liquidation events are often viewed as potential buying opportunities, as noted by CoinDesk, suggesting that they may indicate an overstretched market ready for a price correction.
In particular, TRUMP tokens surged by 12%, leading the way among mid-cap cryptocurrencies, defined as those with a market cap below $5 billion. The gains among major cryptocurrencies were partly fueled by Tuttle Capital filing for the first-ever 2x leveraged ETFs in the U.S. on Monday. These proposed products aim to deliver 200% of the daily price performance for nearly all major tokens, including BONK, TRUMP, and MELANIA.
Monday’s market downturn was largely attributed to breakthroughs from DeepSeek, which unveiled a model that reportedly outperformed AI giant OpenAI’s system, all while being developed on a modest budget of $6 million and utilizing only a fraction of the Graphics Processing Units (GPUs) employed by OpenAI, which recently concluded a $6.6 billion funding round with a valuation exceeding $157 billion.
However, some traders believe that DeepSeek’s advancements are merely one of several factors that could influence Bitcoin and the broader cryptocurrency markets in the near future. “Initial fears regarding DeepSeek created a buying opportunity for crypto, as the industry isn’t in direct competition with the Chinese AI firm,” explained Nick Ruck, director at LVRG Research, in a Telegram message to CoinDesk. “Instead, founders of crypto projects leveraging AI can integrate DeepSeek’s open-sourced model into their platforms to enhance efficiency and drive innovation.”
“Nevertheless, we anticipate turbulent waters ahead, as this week is laden with macroeconomic data releases from U.S. agencies, including the FOMC meeting, alongside earnings reports from major corporations such as Apple, Meta, and ASML. We maintain a positive outlook for Bitcoin in the long term, as current policies appear to support growth within the cryptocurrency sector both in the U.S. and globally,” Ruck added.
Market participants predict no indications of a rate cut during the two-day FOMC meeting scheduled for January 28 to January 29, which has historically influenced Bitcoin prices as investors reassess their preferences between risk assets.
In a unique twist, Singapore-based QCP Capital provided astrological insights as part of a broader market update on Tuesday. “As we approach the Year of the Snake, the market’s unpredictable nature reminds us of the wisdom, adaptability, and resilience that this zodiac embodies—qualities that will prove essential as we navigate the challenges and opportunities that 2025 may bring,” the firm stated in a broadcast.
There may be some merit to this perspective, as CoinDesk reported on Monday. Bitcoin proved to be highly profitable for bulls in 2024, the Year of the Dragon, while firms based in Hong Kong cautioned about “unpredictable twists” that could ultimately lead to new all-time highs—based on the positioning of “Rough Green” and “Brown Tree” snakes within the lunar charts.
