Bitcoin experienced a sharp decline of nearly 6% in the last 24 hours, falling briefly below $98,000. This drop occurred despite a significant development on Friday when President Donald Trump announced the formation of a crypto policy group set to shape the country’s crypto industry within six months.
Market experts are now cautioning that further losses may follow.
“Financial Crisis” Looms
BitMEX co-founder Arthur Hayes predicts a turbulent path ahead for Bitcoin, expecting a correction to between $70,000 and $75,000 due to a “mini financial crisis.”
Despite this, he remains bullish on Bitcoin’s long-term outlook, projecting a rally to $250,000 by the end of the year, driven by renewed monetary stimulus.
“I am calling for a $70k to $75k correction in $BTC, a mini financial crisis, and a resumption of money printing that will send us to $250k by the end of the year.”
Bitcoin’s recent plunge was attributed to a broader market sell-off triggered by the rising popularity of the China-based artificial intelligence app DeepSeek. The app’s performance, which rivals OpenAI’s models with lower chip requirements, has raised concerns among investors, prompting a “risk-off” sentiment.
Bitcoin, which surged past $70,000 in November following Donald Trump’s election victory and subsequent pro-crypto initiatives, remains closely tied to the US stock market. Its price tends to move in tandem with high-growth tech stocks, which have benefited from the AI boom since 2022. However, DeepSeek’s advancements have created fears of a shift in the market, which ultimately led to sharp declines in crypto prices.
Market analyst Adam Kobeissi described the latest sell-off as a reaction to investor uncertainty driven by DeepSeek’s disruptive potential.
Bitcoin’s Failed Head-and-Shoulders Pattern
Data shared by crypto analyst Ali Martinez shows the failure of a head-and-shoulders pattern in Bitcoin’s price action, suggesting a bullish outlook for the world’s largest cryptocurrency. In his latest tweet, Martinez indicates that this pattern breakdown points to a potential upside target of $122,000 following the invalidation of the bearish setup and the subsequent possibility of significant upward momentum.
The failure of this head-and-shoulders pattern suggests a potential upside target of $122,000 for #Bitcoin $BTC! pic.twitter.com/vMTfoaRNSO
— Ali (@ali_charts) January 27, 2025
Martinez also drew parallels between BTC’s current price action and its 2015-2018 market cycle. In his latest observation, the analyst noted that historically, Bitcoin tended to go parabolic around this stage of the cycle.
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