The cryptocurrency market experienced a sharp downturn on Monday night, with Bitcoin and other digital assets plunging due to a broader stock market sell-off and fears over upcoming Federal Reserve policy decisions.
Crypto Market Declines
The total crypto market cap declined by nearly 5.2% over the past 24 hours, now sitting at $3.43 trillion, reflecting growing investor uncertainty.
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Bitcoin, which had neared an all-time high of $109,114 on Friday, dropped 6.7% from nearly $105K to a low of $97.9K early Monday and is currently trading slightly above $99K.
Major altcoins suffered even more, with Solana crashing 12% to $223, Ripple dropping 12.8% to $2.72, and Ethereum declining 9.4% to a Monday low of $3,024.
Crypto market value made a steep decline on Monday. Source: CMC
Stock Market Decline Weighs on Crypto
One major factor behind the latest crypto market dip is the sharp sell-off in the US stock market, particularly in the tech sector.
The decline is primarily due to the rapid rise of DeepSeek, a Chinese AI app that competes with OpenAI while using fewer resources.
As DeepSeek became the most downloaded app on the App Store, its success sparked fears about US tech dominance, causing a 330-point drop in Nasdaq futures, according to global market analyst Kobeissi.
Since Bitcoin is often viewed as a high-risk, high-reward asset like tech stocks, the sell-off also impacted the crypto market, with Kobeissi noting growing concerns about shifting tech leadership.
Federal Reserve Uncertainty
Investor uncertainty around the upcoming US Federal Reserve meeting is another key factor affecting the crypto market.
On Wednesday afternoon, the US Federal Reserve will announce its latest monetary policy decision and the outlook for 2025.
The central bank is widely expected to keep interest rates unchanged, however, the US President Donald Trump has signaled a strong preference for rate cuts, citing declining oil prices as a justification for monetary easing.
A prominent crypto investor, Arthur Hayes, predicts a Bitcoin correction to $70,000-$75,000 but remains bullish, forecasting Bitcoin could reach $250,000 if the Fed eases monetary policy.
Why This Matters
Rising US debt, inflation worries, and market volatility are fueling caution. Amid ongoing macro and policy uncertainties, Bitcoin and crypto remain sensitive to external factors. Traders brace for more volatility as key economic events unfold.
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