Why are Bitcoin and other cryptocurrencies dropping?
In the past few hours, Bitcoin (BTC) has fallen over 5%, while large-cap altcoins are down 8%-10%. This decline isn't primarily about the crypto market but is tied to the performance of the U.S. stock market.
The U.S. stock market has experienced a significant sell-off today, and it's largely due to one app: DeepSeek. DeepSeek is a Chinese AI startup competing with ChatGPT. Reportedly, it cost less than $10 million to develop, a fraction of ChatGPT’s development costs.
Notably, DeepSeek recently surpassed ChatGPT to become the #1 free app on the Apple App Store. While ChatGPT is valued at $157 billion, DeepSeek’s valuation stands at just 0.2% of that. This has raised concerns among major U.S. investors, who now fear that some U.S. tech companies may be overvalued. In response, they're selling off stocks, which is impacting broader markets, including crypto.
However, there’s no need to panic and sell your crypto holdings. Fear, uncertainty, and doubt (FUD) are common in markets. Stay patient, HODL, and ride out the volatility.