Bitcoin ( BTC ) fell below $100,000 for the first time since US President Donald Trump took office on Jan. 20 as global markets reacted to rising competition in the AI sector and shifting monetary policies. 

The world’s largest cryptocurrency by market capitalization dropped to as low as $98,046 on Jan. 27.

Much of the turbulence has been attributed to the rapid rise of China-based AI app DeepSeek, which claimed the top spot on Apple’s App Store rankings in the US, displacing ChatGPT to third place just a week after its launch.

“The hype around DeepSeek and broader volatility in the US AI market has spooked investors, leading to a flight to safety,” Alvin Kan, chief operating officer at Bitget Wallet, said in a statement shared with Cointelegraph.

Related: DeepSeek rout costs bulls $100K — 5 things to know in Bitcoin this week

“With the next Federal Reserve meeting approaching and expectations of no rate cuts, the market is pricing in a more hawkish tone, adding to the cautious mood,” Kan added.

Bitcoin falls below $100K for the first time under Trump presidency image 0

Source: Michael Saylor

DeepSeek’s AI model, reportedly developed for just $6 million, has intensified fears of an escalating AI arms race, and its success has reverberated through global markets.

Nvidia, whose dominance in the AI boom drove its valuation to a world-leading $3.49 trillion, shed 3.12% by the Jan. 24 closing bell.

Source: The Kobeissi Letter

As for the crypto market, around $864 million in positions were wiped out, with Bitcoin long positions pitching in $250 million alone, according to CoinGlass data .

“Some derivatives who put bullish position on margin got called,” Justin d’Anethan, head of sales at token launch advisory firm Liquifi, told Cointelegraph.

“The scramble for downside protection suggests traders are bracing for further chop. With no major catalysts until this week’s [Federal Open Market Committee], the market is likely to hover in this range as it waits for fresh policy cues,” he added.

Related: The release of DeepSeek R1 shatters long-held assumptions about AI

The US Federal Reserve’s first interest rate decision under President Trump is scheduled for Jan. 28 and 29, which is expected to remain unchanged at 4.25% to 4.5%, according to the CME FedWatch tool.

But analysts at Matrixport presented a bull case despite piling negative market sentiment. The crypto services firm pointed to the Lunar New Year celebrations across Asia this week, which it called the “most statistically favorable 20-day window for Bitcoin.”

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This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.