Bitcoin falls as AI industry turmoil drives gains, analysts say initial market reaction may be overdone

DeepSeek’s success points to growing competition from China in artificial intelligence, heightening concerns about whether high valuations for U.S. tech stocks can last. The risk for the cryptocurrency industry is that such anxiety could dampen broader speculative enthusiasm and blunt the boost from Trump’s executive order supporting digital asset regulation. “While cryptocurrency markets remain closely tied to tech sentiment, periods of heightened volatility tend to be temporary and initial market reactions may be somewhat overdone,” Rick Maeda, a research analyst at Presto Research, wrote in a note to clients. Bitcoin’s 30-day correlation with the Nasdaq 100 is about 0.67, according to data compiled by Bloomberg. A reading of 1 indicates that assets move in sync, while a reading of -1 indicates an inverse correlation. Charlie Morris, chief investment officer at ByteTree Asset Management, believes that “it’s becoming increasingly difficult to distinguish between Bitcoin and Big Tech” given that the two companies have moved hand in hand. Despite the executive order and a pullback in the dollar index this year, “Bitcoin has also been unable to hit new highs,” he wrote in a note. Parts of the digital asset market have already been caught in a deep correction. An index tracking the top 100 digital assets has fallen more than 10% since the beginning of the year. (Bloomberg)