Sudden Fed ‘Financial Crisis’ Fear Sparks Huge Bitcoin And Crypto Price Crash Prediction

Bitcoin and crypto prices have moved sharply lower, diving along with a stock market sell-off sparked by the surging popularity of China-based artificial intelligence app DeepSeek.

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The bitcoin price has dropped under $100,000 per bitcoin, down from an all-time high of almost $110,000 ahead of U.S. president Donald Trump’s inauguration (despite the chief executive of major bitcoin and crypto exchange Coinbase predicting when the bitcoin price could flip gold’s $18 trillion).

Now, as BlackRock’s Larry Fink reveals his discussions with sovereign wealth funds about buying bitcoin, closely-watched crypto trader Arthur Hayes has warned of a looming “financial crisis” that he expects to unleash fresh Federal Reserve stimulus measures.

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“I am calling for a $70,000 to $75,000 correction in bitcoin [and] a mini financial crisis,” Hayes, a cofounder of bitcoin and crypto derivatives pioneer BitMex who went on to set up the Maelstrom investment fund, posted to X.

Bitcoin rocketed past $70,000 on the back of Donald Trump’s November election victory as traders bet Trump will spur the growth of bitcoin and crypto.

Last week, Trump followed through on his campaign promises to make overhauling crypto policy one of his administration’s priorities, ordering the creation of a bitcoin and cryptocurrency working group tasked with proposing new regulations and exploring the creation of a national cryptocurrency stockpile.

The bitcoin price is closely correlated to the U.S. stock market, with bitcoin and crypto trading in line with high-growth tech stocks that have surged due to the rush into artificial intelligence since 2022 but now look at risk as DeepSeek achieves performance similar OpenAI’s models with fewer chip requirements.

“Risk-off is the theme as DeepSeek scares investors,” market analyst Adam Kobeissi posted to X, pointing to the crypto and bitcoin price sell-off that’s seen ethereum rival solana drop 10%.

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“Nasdaq 100 futures are now down -330 points since the market opened just hours ago as DeepSeek takes #1 on the App Store. This is how you know DeepSeek has become a major threat to U.S. large cap tech,” Kobeissi’s market advisory service account posted.

This week, the Federal Reserve is widely expected to leave interest rates on hold when it meets for its first policy meeting since Trump assumed office on Wednesday, though Trump has said he wants the Fed to bring interest rates down.

“With oil prices going down, I’ll demand that interest rates drop immediately, and likewise they should be dropping all over the world,” Trump told World Economic Forum attendees last week.

However, Hayes said he believes the Fed will resume “money printing that will send [the bitcoin price] to $250,000 by the end of the year.”

U.S. debt has soared over recent years, topping $34 trillion at the beginning of 2024, with Covid and lockdown stimulus measures contributing to massive government spending and helping to send inflation spiraling out of control in 2022.

Inflation of over 10% forced the Federal Reserve to hike interest rates at a historical clip, pushing up debt interest payments and fueling fears of a “death spiral.”