Cryptocurrency prices plummet as fears linked to a 'financial crisis' arise, driven by market disruptions tied to AI and macroeconomic shifts.

The article discusses the recent sharp decline in cryptocurrency prices, triggered by a significant stock market fall. This downturn arises amidst rising concerns over the impact of DeepSeek, a cutting-edge, China-based AI application, which has surged in popularity. Investors are increasingly concerned about its potential to disrupt U.S. tech dominance, leading to broader sell-offs in both the crypto and tech sectors. Bitcoin, which previously soared to over $100,000 following Donald Trump's election victory, has seen a drop just below this threshold, rekindling fears of a broader financial crisis. Former BitMex co-founder Arthur Hayes predicts a short-term downturn in Bitcoin's price, followed by a potential rebound to $250,000 if Federal Reserve interventions, such as stimulus measures, take effect. In addition, BlackRock’s CEO Larry Fink has hinted at institutional interest in Bitcoin, with discussions around sovereign wealth funds possibly adopting the cryptocurrency. The conversation also highlights the Federal Reserve's expected cautious approach to interest rates, though President Trump has been vocal about pushing for cuts. The growing public debt and past inflationary pressures, traced back to pandemic responses, amplify the uncertainty surrounding these markets. Crypto movement continues to align closely with U.S. tech equities, with the growing AI sector playing a pivotal role. The Fed is likely to face pressure to balance monetary policy in a delicate economic environment, with speculative optimism around potential recovery influencing forecasts in the meantime.