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Weekly crypto close: AI buzz shakes markets

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Rachael Lucas
Weekly crypto close: AI buzz shakes markets

TLDR

  • Bitcoin’s dip below US$100k triggered US$1B+ in liquidations before rebounding
  • AI industry shakeup from China’s DeepSeek R1 impacted tech stocks and crypto markets
  • Crypto remains cautious as it awaits further signals from regulators and central banks

AI buzz shakes markets

It’s been an eventful week, with the global markets reacting to some seismic shifts in the AI space while crypto held its ground in parts but faltered in others. Let’s break it down.

Key highlights

The cryptocurrency market delivered mixed results last week. Bitcoin (BTC) ended the trading week at US$102,620 but later retreated to US$97,777 during Monday’s session, influenced by broader macroeconomic concerns.

Ethereum (ETH) posted modest gains to close the week at US$3,232.61. Cardano (ADA) stood out as the top performer, climbing to US$0.9530. Meanwhile, XRP advanced to US$3.0223, buoyed by optimism surrounding Ripple’s expanding utility and partnerships.

On the downside, SUI dropped sharply to US$3.87. Solana (SOL) also struggled, declining to US$240.50.

weekly crypto close

The weekly trading stats as of Monday, January 27th at 11:00 am AEDT, based on data from Tradingview in USD.

Check prices

BTC pullback triggers US$1B in bullish liquidations

Crypto markets experienced significant volatility on Monday, with BTC’s slide to US$97,777 triggering over US$1 billion in bullish liquidations. This marks one of the largest liquidation events since January 18th and could provide important cues for market sentiment and positioning moving forward.

coinglass liquidations

Source: Coinglass

AI outlook – what’s happening?

"Is the US losing the war in AI?" It's a provocative question making the rounds this week, but the reality is more nuanced. The buzz started with DeepSeek, a Chinese AI startup that’s now dominating headlines. DeepSeek has overtaken ChatGPT as the #1 free app on the Apple App Store, creating waves not just in tech but across financial markets.

Here’s the kicker: DeepSeek was built for under US$10 million, compared to ChatGPT's hefty US$157 billion valuation. This kind of disruption has sparked a recalibration in how investors view the U.S. tech landscape, leading to selloffs in tech-heavy indices. The knock-on effects hit crypto too, with higher volatility in Bitcoin and altcoins.

The AI-crypto connection: why it matters

The rise of DeepSeek has raised serious questions about the U.S. tech sector's valuation, and it’s spilling over into crypto. Why? Because crypto, as a risk-on asset class, tends to mirror shifts in broader risk appetite.

Key takeaways:

  • Liquidation events as market signals: Large liquidation clusters, like the one seen on Monday, often act as contrarian indicators. While they can exacerbate short-term price moves, they also help flush out overleveraged positions, potentially setting the stage for a more stable market structure.
  • Bull market corrections remain normal: Despite the sharp pullback, it’s worth noting that corrections of up to 30% are common in bull markets. Bitcoin’s on-chain metrics continue to support the broader uptrend. A retest of the range lows around US$90,000 would not invalidate the bullish structure and could even provide a stronger foundation for the next leg up.
  • Macro overhang persists: Traders remain cautious ahead of this week’s U.S. Federal Open Market Committee (FOMC) meeting, with profit-taking and de-risking contributing to the selloff. Additionally, concerns about a potential tech sector selloff, driven by the launch of China-based AI leader DeepSeek, have added to the risk-off tone.

Key drivers this week

  • Altcoin divergences: While Bitcoin and Ethereum moved steadily, altcoins like ADA and LINK outperformed on strong project updates, while SOL and SUI faced headwinds tied to sector-specific concerns.
  • Spot ETF momentum builds: Exciting news out of traditional finance as CoinShares has filed for a spot Litecoin ETF. Building on the buzz around spot Bitcoin ETFs, which have now surpassed US$40 billion in assets under management with a year-to-date return of 127%. These developments continue to solidify crypto’s place in mainstream investment portfolios.

It’s a market of stories right now, Bitcoin holding steady, Cardano shining, and SUI slipping. But the big takeaway is the growing narrative around institutional adoption. This is shaping up to be a pivotal year for crypto as traditional finance continues to deepen its connection with the digital asset space.

Let’s see what the week ahead brings.

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