As DeepSeek AI and pre-FOMC anxiety rip the crypto market, retail is asking why is crypto down Today? And, when will crypto recover?
It’s been a tough 24 hours for crypto traders. Bitcoin
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tumbled to an intraday low of $97,750 before bouncing back above the crucial $100,000 mark.
This sharp drop erased$90 billion from the crypto market’s valuation, leaving many wondering what’s behind the sell-off and whether the market can recover.
Is this the start of a bearish phase, or just another shakeout typical of the crypto market’s cycles?
Why is Crypto Going Down? Market Maker Fakeout Games Amid Pre-FOMC Anxiety
If you’ve been in crypto long enough, you’ll recognize the familiar volatility pattern ahead of major economic events.
With the Federal Reserve’s FOMC meeting just days away, market makers (MMs) seize the opportunity to capitalize on uncertainty. By engineering a liquidity sweep, they’ve managed to trigger over $900 million in liquidations, wiping out long positions across Bitcoin, Ethereum, and altcoins.
Bitcoin’s drop below $100K looks like a classic move to shake out weak hands and entice retail shorting. These MMs thrive on volatility, and pre-FOMC jitters give them the perfect environment to reset positions.
If you were paying attention yesterday to my feed you will now understand nobody sold Bitcoin or crypto. Exchanges sold crypto using Market Makers to remove leverage traders. If you see any accounts saying people dumped Bitcoin, or “Bitcoin dumped”, unfollow them, they have no…
— MartyParty (@martypartymusic) January 27, 2025
Add in seasonal factors like tax-related sell-offs, and you’ve got the perfect storm. However, the fundamentals for crypto haven’t changed—if anything, they’re more bullish than ever – if you wanted a pro-crypto Trump Presidency, you got it.
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DeepSeek AI: FUD or Real Risk?
On top of the FOMC anxiety, a new narrative has entered the market: China’s DeepSeek AI.
This low-cost, high-efficiency AI competitor has rattled U.S. tech markets, with Nvidia and Qualcomm stocks dropping by 4% and Nasdaq futures slipping by 2-3%.
BREAKING: This is not a memecoin.
This is Nvidia, $NVDA, the most valuable company in the world before today.
It is down 17%.
It lost $560 billion in market cap today so far, the largest in market history. pic.twitter.com/oh85aMY7uJ
— unusual_whales (@unusual_whales) January 27, 2025
AI-focused crypto projects like Render
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and Fetch.ai
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saw losses of over 10% in the wake of this tech sector volatility.
But let’s be clear—this has little to do with Bitcoin or the broader crypto market. The DeepSeek narrative is mostly FUD, creating a knee-jerk reaction in correlated markets.
There’s no evidence this development directly impacts blockchain technology or the long-term prospects for digital assets, and these price moves reflect the increased correlation between crypto markets and US tech stocks as the crypto market institutionalizes and matures.
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When Will Crypto Recover? Bullish Fundamentals Remain Unchanged Since Last Week
Despite the short-term noise, Bitcoin’s core fundamentals remain rock solid and are going according to halving cycles (there are still over 100 days left in this run based on historical trends).
Beyond this, institutional confidence has remained high since Bitcoin ETFs launched last year. MicroStrategy just bought more Bitcoin, signaling that big players are still bullish. And Solana ETFs could be coming to bolster SOL price sooner than you think.
Not to mention, Trump is already empowering the next phase of the bull run, namely the $500Bn Stargate AI stimulus (load up on AI crypto now!) and a US Coin Reserve beckoning nation-state adoption.
Overall, it’s important to remember that short-term volatility like this is normal in crypto, especially during risk-off periods like the pre-FOMC.
(Bitcoin Dominance)
Market makers are likely using this dip to accumulate Bitcoin and other major altcoins while retail traders panic. With Bitcoin dominance climbing to 58.3% and altcoins capitulating harder, smart money is positioning for the next leg up.
The long-term outlook for Bitcoin and crypto remains firmly bullish. Don’t let the noise shake your conviction—this dip is more opportunity than obstacle.
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