Bitcoin Drops Below $99K as Traders Eye FOMC Meeting and DeepSeek AI Impact

Bitcoin Price Drops Below $99K Amid Fed Meeting Anticipation and China's AI Breakthrough

  • Bitcoin Price fell below $99,000 amid profit-taking before the Federal Reserve meeting.
  • DeepSeek’s cost-effective AI model development impacts U.S. tech sector sentiment.
  • U.S. President Donald Trump established a cryptocurrency policy advisory group.
  • Traders show interest in $95,000 strike options as downside protection.
  • Market capitalization decreased 8% while CoinDesk 20 index dropped 8.14%.

Market Downturn Ahead of Fed Meeting

Bitcoin‘s value decreased to under $99,000 on Monday as investors secured profits before the upcoming U.S. Federal Reserve Federal Open Market Committee (FOMC) meeting, while developments in Artificial Intelligence technology from China affected market sentiment.

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The cryptocurrency experienced a 6% decline from Sunday’s peak of $105,000, coinciding with Asian market operations beginning Monday. This movement occurred despite President Donald Trump initiating a cryptocurrency policy advisory group on Friday, mandating guidance for the industry within six months.

AI Development Impacts Tech Sector

Chinese company DeepSeek introduced an artificial intelligence model developed with just $6 million, achieving performance metrics surpassing OpenAI. This development contrasts with OpenAI’s recent $6.6 billion funding round at a $157 billion valuation.

"U.S. economic data shows that there may be less need for a federal interest rate cut in the near term," stated Ben El-Baz, managing director of HashKey Global.

Market Response and Trading Activity

The broader cryptocurrency market reflected the downturn, with total market capitalization declining 8%. U.S. stock index futures mirrored this trend, with S&P 500 and Nasdaq 100 futures declining up to 2.15% before market opening.

Traders positioned themselves defensively by acquiring $95,000 strike options. QCP Capital traders noted in their Saturday communication: "The desk observed growing interest in the Jan $95,000 strikes as the market scrambled for downside protection after BTC lost momentum during yesterday’s U.S. session."

The FOMC meeting, scheduled for January 28-29, typically influences Bitcoin prices as investors adjust their risk asset positions based on Federal Reserve policy signals. Markets currently expect no indication of interest rate reductions at this meeting.

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