Bitcoin's price has been on a rollercoaster this past week, reflecting a mix of AI-driven market jitters, Federal Reserve decisions, and geopolitical tensions. After tumbling 7% from Sunday into Monday, Bitcoin managed to rebound 1.5% by Thursday, though it remains under pressure as macroeconomic forces and policy changes unfold.

As of today, Bitcoin is priced at $93,961.43, down 6.31% in the past 24 hours, according to CoinMarketCap. The price action signals growing investor uncertainty, with traders reacting to multiple catalysts impacting both traditional markets and the broader crypto space.‍

AI Disruptions Shake Markets, Impacting Bitcoin

Bitcoin’s initial selloff came in the wake of the DeepSeek AI model launch, which claims to rival OpenAI at a lower cost. While this development has no direct connection to Bitcoin itself, financial markets took a hit, dragging risk assets—including cryptocurrencies—downward.

DeepSeek’s emergence sparked a sharp decline in AI-related stocks, with indices sliding lower as investors reassessed valuations in the space. This broader market turbulence had a spillover effect on Bitcoin, which has shown increased correlation with US equities in recent years.

According to 10X Research, “the DeepSeek-induced selloff may have been a temporary overreaction, and savvy investors took advantage of the dip.” Indeed, Bitcoin clawed back some of its losses by midweek, suggesting that traders recognized the AI shake-up had little fundamental impact on crypto markets.‍

The Fed Stays Put, But Bitcoin Finds Relief

Another key driver of Bitcoin’s price action was the Federal Reserve’s latest policy decision, according to a NYDIG report. On Wednesday, the FOMC held interest rates steady, marking the first pause since July. While some might have viewed this as a hawkish signal—suggesting rates could stay higher for longer—the market responded positively to Fed Chair Jerome Powell’s comments.

Powell addressed the regulatory landscape for crypto, clarifying that banks can provide services to crypto entities but will face stricter oversight when engaging directly in digital assets. The remarks briefly boosted Bitcoin, as they signaled continued institutional involvement in crypto without outright restrictions.

However, some investors had hoped for the repeal of SEC rule SAB 121, which currently limits how banks can custody digital assets. Analysts at 10X Research warned that expectations for immediate banking adoption of crypto may be premature, leading to some caution in the market.‍

Trump’s Tariffs and Global Uncertainty Add to Bitcoin’s Volatility

Beyond AI and the Fed, geopolitical concerns are adding another layer of uncertainty for Bitcoin. US President Donald Trump, who has been pushing an aggressive economic agenda, signed and implemented new tariffs on February 1, targeting Canada and Mexico.

Markets had largely priced in the tariffs, but the reaction from global leaders and threats of retaliation caused renewed unease. Bitcoin’s rally was derailed as traders reassessed the potential impact of a trade war on risky assets.

Adding to the uncertainty, Trump has also renewed pressure on the Federal Reserve, using his Truth Social platform to call for immediate rate cuts. During his appearance at Davos, he argued that the Fed was holding back economic growth, an approach that some investors believe could have inflationary consequences if acted upon.‍

Bitcoin’s Changing Market Dynamics

According to data analyzed by 10X Research, Bitcoin’s long-term correlation with equities remains low, at 0.13 since 2011, but it has significantly increased since the COVID-19 pandemic. In the pre-COVID era, Bitcoin had zero correlation with equities, but since February 2020, its correlation has climbed to 0.36, reaching 0.44 in recent readings.

This shift suggests that Bitcoin is moving more in tandem with risk assets, making it more susceptible to macroeconomic events such as AI-driven market selloffs, interest rate policy shifts, and geopolitical tensions.

Despite the recent turbulence, Bitcoin remains up 12.3% year-to-date, reflecting ongoing investor confidence in non-sovereign stores of value like crypto and gold. Notably, gold has also seen strong performance, gaining 6.9% YTD, including a 2.1% rise last week.

While technical support levels remain at risk, on-chain data and breakout models remain constructive for Bitcoin’s medium-term outlook.