PANews reported on January 29 that DeepSeek's success shows that competition from China in artificial intelligence is becoming increasingly fierce, exacerbating concerns about whether the high valuations of US technology stocks can continue. The risk for the cryptocurrency industry is that this anxiety may weaken broader speculative enthusiasm and weaken the boost from Trump's executive order supporting digital asset regulation.
"While cryptocurrency markets remain closely correlated with tech sector sentiment, periods of heightened volatility tend to be temporary and initial market reactions may be overdone," Rick Maeda, research analyst at Presto Research, wrote in a note to clients.
Data compiled by Bloomberg show that the 30-day correlation coefficient between Bitcoin and the Nasdaq 100 Index is about 0.67. A reading of 1 means that the assets move in sync, while a reading of -1 indicates an inverse correlation. Charlie Morris, chief investment officer of ByteTree Asset Management, believes that "it is becoming increasingly difficult to distinguish between Bitcoin and large technology companies" given that Bitcoin and large technology companies go hand in hand. Despite the executive order and the pullback of the US dollar index this year, "Bitcoin has not been able to hit new highs," he wrote in a report.
Parts of the digital asset market have fallen into a deep correction. An index tracking the top 100 digital assets has fallen more than 10% since the beginning of the year. (Bloomberg)