As DeepSeek AI and pre-FOMC anxiety affect the crypto market, many are asking why cryptocurrency values have fallen today. The last 24 hours proved challenging for traders, with Bitcoin dropping to a low of $97,750 before recovering above the $100,000 threshold.

This sudden decrease wiped out approximately $90 billion from the total market value, prompting speculation about the underlying causes and the possibility of recovery. Is this merely a phase of bearish sentiment, or is it a typical market fluctuation?

Why Is Crypto Declining? Market Manipulation and Pre-FOMC Tension

The crypto market often exhibits volatility ahead of significant economic announcements. With the upcoming FOMC meeting, market makers exploit the resulting uncertainty, leading to substantial liquidations exceeding $900 million.

The plummet below $100K seems to push out weak investors while inviting retail shorting, benefiting those who thrive on price swings. Additionally, seasonal influences, such as tax-related sell-offs, contribute to the turbulence.

“If you were aware yesterday, you’d realize nobody sold Bitcoin or cryptocurrency. Exchanges executed sell-offs to eliminate leveraged positions. Ignore those claiming otherwise.” — MartyParty (@martypartymusic) January 27, 2025.

Despite this panic, the fundamentals for cryptocurrency remain robust—if anything, they are increasingly positive, with several bullish signs in the market.

DeepSeek AI: Cause for Fears?

Adding to the FOMC-related anxiety is a fresh narrative surrounding China’s DeepSeek AI. This advanced AI competitor has caused declines in US tech stocks, with notable drops in shares of Nvidia and Qualcomm.

“This is not a meme coin. Nvidia, prior to today, was the world’s most valuable company, yet it has lost $560 billion in market cap today alone—an unprecedented event.” — unusual_whales (@unusual_whales) January 27, 2025.

Cryptocurrency projects linked to AI, like Render and Fetch.ai, have seen substantial losses as tech sector volatility resonates across their markets. Importantly, this situation appears disconnected from Bitcoin’s prospects, showcasing the rising relationship between cryptocurrency prices and US tech markets.

When Will Crypto Bounce Back? Strong Fundamentals Persist

Regardless of this temporary upheaval, Bitcoin’s foundational strengths appear unchanged, in line with halving cycles. Notably, MicroStrategy has continued to acquire more Bitcoin, signaling ongoing institutional confidence.

Key developments such as the anticipated arrival of Solana ETFs could soon positively influence the price of SOL. Furthermore, recent government initiatives, including a $500 billion AI investment package, highlight an ongoing bullish climate in the cryptocurrency landscape.

Ultimately, while short-term fluctuations are inherent in the crypto world—particularly around risk-sensitive periods like the pre-FOMC—the outlook for Bitcoin and the broader market remains decisively optimistic.