Crypto Crash: Crypto Market Faces $200 Billion Crash, here's what happened

Why did Cryptos Crash?

The unexpected rise of a Chinese AI application, DeepSeek, has triggered concerns among investors. Designed as a competitor to ChatGPT, DeepSeek recently claimed the top spot on the Apple App Store’s free apps list. What has captured attention is the stark difference in development costs: DeepSeek was created for under $10 million, compared to ChatGPT’s staggering $157 billion valuation.

This success has sparked fears among U.S. investors that American tech companies might be significantly overvalued. This unease prompted widespread selling in the U.S. stock market, which spilled over into the crypto market, amplifying the losses across major digital assets.

Large-Scale Liquidations Amid the Downturn

The crypto market slump has led to extensive liquidations, wiping out millions in value. Over the past 24 hours, liquidations totaled $613 million, with long traders bearing the brunt of the losses at $569 million.

The single largest liquidation was recorded on the HTX exchange, where one position worth $98.46 million was closed. These events highlight the volatility that can occur when market sentiment shifts abruptly.

Bitcoin Battles to Stay Above $100K

Bitcoin, the cornerstone of the cryptocurrency market, is struggling to maintain the $100,000 support level. The flagship cryptocurrency has fallen over 5%, currently trading near $99,969 after briefly dipping to $99,902 earlier in the day.

The $100,000 mark is now a crucial support zone. Should Bitcoin drop below this level, it could pave the way for further declines. Conversely, a rebound above $105,000 could reignite bullish momentum, restoring confidence among traders.

BTC/USD 4-hours chart - TradingView

Altcoins Face Steep Losses

Altcoins have also taken a significant hit during this market downturn. Major players like Ethereum (ETH), XRP, and Solana (SOL) have seen their values drop by 8% to 10%.

Even meme coins have not been spared: Dogecoin (DOGE) and Shiba Inu (SHIB) have fallen by 8% and 7%, respectively. Meanwhile, niche tokens such as PEPE and TRUMP have suffered even steeper losses, with declines of nearly 13%.

What’s Driving the Market Sell-Off?

The root of this market-wide decline lies in the ripple effects of U.S. stock market movements. Investor apprehension over tech stock valuations has led to broader market sell-offs, pulling cryptocurrencies down alongside traditional assets.

The rise of disruptive technologies like DeepSeek has further fueled uncertainty. As confidence in tech valuations wavers, the correlation between stock markets and cryptocurrencies continues to play a critical role in influencing digital asset prices.