Introduction
Bitcoin and crypto prices experienced a dramatic fall on January 27th, followed by US President Donald Trump’s inauguration rally. Fear sparked from the market sell-off prediction by the China-based AI app DeepSeek led to this decline in cryptocurrency prices. The price of crypto dropped soon after Trump recognized the digital asset industry as a driving force behind innovation in the country. Read this news on crypto to explore more about this market volatility driven by the crypto crash.
Current Scenario of Cryptocurrency in the US
Prior to the fall in crypto prices, Trump promised to promote digital assets to drive innovation in the US. The scenario of cryptocurrency in the US continues to evolve as Trump ordered the creation of a cryptocurrency working group tasked to propose new digital asset regulations and explore the national cryptocurrency stockpile. By promoting the adoption of digital assets, Trump also instructed about safeguarding the banking services of crypto companies and denied the creation of central bank digital currencies in the country. Calling himself a “crypto president,” Trump garnered praise from the US crypto industry.
Trump’s order addresses years of inappropriateness for cryptocurrency regulation and encourages to write a new regulatory framework that best explores the potential of Bitcoin and cryptocurrency in the country. As cryptocurrency ownership in the US continues to grow, the fear of a potential financial crisis led to this sudden surge in crypto market volatility with a drop in the price of crypto.
A decline in Bitcoin and Crypto Prices Sparked by the Fear of a Financial Crisis
Bitcoin, the largest cryptocurrency market in the world, fell by $100,000 on 27th January 2025. With a decline of 5.4% to $99,359, tokens such as Solana, Cardano, Dogecoing, and Sui witnessed more severe declines. As revealed by BlackRock’s CEO Larry Fink, his discussion with sovereign wealth funds about bitcoin purchase has unveiled co-founder of BitMex, Arthur Hayes’ warning of an imminent mini financial ‘crisis.’
Following Trump’s promise to overhaul crypto policy and order to create a cryptocurrency working group, a significant drop in cryptocurrency prices has caused a crypto crash in the US stock market.
Despite Trump’s promising proposal of a crypto boom, this drop in the bitcoin and crypto prices has raised questions on the authenticity of existing crypto policies. After he assured traders about driving innovation in digital assets, Trump’s rally gave hope to cryptocurrency owners concerning a soar in cryptocurrency value.
However, Trump did not mention crypto in his inauguration speech, and this hit like a ton of bricks for traders. The world came crashing down for investors, who expected at least some regulatory support but were left with nothing after he delivered his speech. Trump’s silence hung like a sword of Damocles over them, causing the crypto market to fall.
Ethereum fell by 6% to $3,144 alongside the decline of major altcoins, such as Solana ( 9.95%), XRP (6%), Dogecoin (9.3%), Sui (11.6%), and many more. This adversity of the crypto market led to the decline of global cryptocurrency market capitalization by 5.4% to $3.42 trillion. Bitcoin’s global market capital fell by $1.989 trillion, as per CoinMarketCap’s statistics.
The Great DeepSeek Fear
Bitcoin and crypto in the US stock market trade in alignment with high-growing tech stocks with advancements in artificial intelligence. However, as DeepSeek attained a similar performing position as OpenAI with fewer chip requirements, the scenario drastically changed.
Market Analyst Adam Kobeissi pronounced, “Risk-off is the theme as DeepSeek scares investors,” indicating bitcoin and crypto prices sell-off. As DeepSeek secured the leading position on the App Store, the looming threat from this Chinese AI app created a panic-stricken situation for investors and cryptocurrency owners who had their money at stake. This sudden sparked DeepSeek fear resulted in the drop in cryptocurrency prices.
Trump demanded a drop in the Federal Reserve interest rates last week in the first policy meeting. Nevertheless, Arthur Hayes believes that the Fed will again start money printing, sending the bitcoin price to rise by $250,000 by the end of 2025.
As of now, the Bitcoin price is trading below 3.8%, which requires further preventive measures to let it fall more. Long-term Bitcoin and cryptocurrency holders have been selling their holdings over the past week, worsening the scenario. The total supply of bitcoin held by long-term investors has decreased by over 75,000, showing the grapple of crypto prices to hit highs.
Conclusion
As Hayes predicts a mini-financial crisis, which will cause the prices of crypto to decline to $70,000, his belief that the US Federal Reserve’s resuming money printing would create another alarming situation of inflation. With this severe downfall of Bitcoin and crypto prices, the crypto crash is expected to hit hard the US economy as evident in this news on crypto.
