Bitcoin Slips $6,000 as Broader Crypto Market Corrects Ahead of Key Economic Events

Bitcoin kicked off the week with a sharp 6% drop, shedding over $6,000 in value and rattling the broader cryptocurrency market. The leading digital asset fell from weekend highs of $105,000 below the $98,000 level, losing its $2 trillion market capitalization in the process, though the token is currently trading at $98,899.

The sudden decline triggered over $130 million in liquidations of long positions, according to Coinglass data, underscoring heightened market volatility.

"The $100K level is a key psychological and technical support. How Bitcoin performs at this level will indicate its resilience in the six-figure territory," BRN analyst Valentin Fourner said in a note on Monday.

"The regulatory shift in the US, paired with growing institutional involvement, highlights a favorable setup for Q1 2025. While the dip raises short-term concerns, we view it as a buying opportunity," the analyst said.

The pullback has drawn attention to a crucial week ahead for financial markets. Traders are now closely monitoring a series of macroeconomic events, particularly the Federal Reserve's upcoming interest rate decision.

While no rate changes are expected, Chair Jerome Powell’s remarks on Wednesday could set the tone for risk assets, including cryptocurrencies.

Market Reaction to Macroeconomic Indicators

The cryptocurrency market has become increasingly sensitive to shifts in monetary policy. Lower interest rates tend to boost liquidity, benefiting speculative assets like Bitcoin. Conversely, higher rates restrain liquidity, dampening enthusiasm across risk markets.

This week, apart from the Federal Reserve meeting, investors are also eyeing Thursday’s preliminary U.S. GDP report and Friday’s core personal consumption expenditures (PCE) index. The GDP data is expected to show 2.7% growth, while core PCE is forecast to increase 0.2% monthly and 2.9% annually. Any surprises in these figures could spark significant moves in digital asset prices.

Arthur Hayes, CIO of family office Maelstrom, has added to the uncertainty with a his prediction: Bitcoin could temporarily plunge to $70,000 before rallying toward $250,000 later this year.

Hayes anticipates a "mini financial crisis" that might prompt central banks to pivot back to accommodative monetary policies, fueling a renewed Bitcoin surge.

Altcoins Follow Suit in Broad-Based Selloff

The Bitcoin downturn has reverberated across the altcoin market, with Ethereum (ETH) falling 8.26% to $3,062 and Solana (SOL) plummeting 12.42% to $226.18. XRP broke below its critical $3 support level, down 11.4%, while Dogecoin (DOGE) declined 12% to $0.3119. The broader market correction wiped out $548 million in liquidations, with Bitcoin accounting for $190 million of the total.

AI-related tokens fared worse, with the shakeup being attributed to China's DeepSeek AI, which is disrupting the space with low-cost, mobile-friendly tech. The AI token basket on CoinGecko fell 12%, compared to 5% for the CoinDesk 20. Node AI has cratered more than 23% while Aethir has slipped over 11%.

These losses have also dented optimism for an alt season, with some analysts questioning whether the first quarter of 2025 can deliver sustained gains for altcoins.

AI Tokens Down Due to China’s OpenAI Competitor, DeepSeek

AI tokens drop 12% and Bitcoin dips 6% as DeepSeek AI disrupts with low cost, mobile-friendly tech

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Crypto Ties to Broader Markets Deepen

The crypto market is not isolated from traditional financial trends. Over the weekend, U.S. stock futures slumped, with the Nasdaq falling over 3%, as the rise of DeepSeek weighed on chipmakers like Nvidia, Broadcom, and Qualcomm.

This spillover effect from the tech sector highlights Bitcoin’s growing correlation with broader equity markets.