Bitcoin (BTC) has regained its footing above $102,000 after dropping to $97,500 during Monday’s stock market rout triggered by Nvidia’s record-breaking single-day market cap loss.
Nvidia lost $465 billion in value, while the Nasdaq fell 3%, but Bitcoin showed resilience, surging by over $5,000 from its recent lows.
Andre Dragosch, European Head of Research at Bitwise, described Bitcoin’s price action as “extremely bullish,” highlighting its outperformance against the Nasdaq index over the past two trading days. This trend, Dragosch suggested, signals limited downside for BTC despite broader market uncertainty.
Stock Market Volatility vs. Crypto Strength
The turmoil was sparked by the release of DeepSeek’s Janus-Pro-7B AI image generator, which intensified concerns over U.S. dominance in AI technology. Nvidia shares plunged 17%, contributing to the broader risk-off sentiment that rippled across tech and crypto-related stocks.
Crypto mining companies were hit hard, with Core Scientific (CORZ) dropping 29% and Hut 8, Riot Platforms, and Cipher Mining also suffering significant losses. These companies’ increasing reliance on AI and high-performance computing contributed to their vulnerability during Nvidia’s meltdown.
Despite the broader sell-off, Bitcoin’s strength stood out, with traders noting that BTC has outperformed small-cap stocks and financials year-to-date.
Short-Term Holders Exit as Futures Signal Capitulation
Short-term Bitcoin holders, defined as those holding coins for less than 155 days, transferred over 21,000 BTC (worth $2.2 billion) to exchanges at a loss during the sell-off. This marked the second-largest transfer of the month and reflected panic among newer investors who had purchased at near-record highs of $108,000 earlier in the year.
The Chicago Mercantile Exchange (CME), a key venue for institutional Bitcoin trading, saw a record drop in open interest (OI), with notional OI plunging by $2.4 billion (equivalent to 17,000 BTC). This led to a negative basis on Bitcoin futures, mirroring the bearish sentiment in traditional markets.
Analysts See “Explosive Move” Ahead for Bitcoin
Despite the turbulence, analysts remain optimistic about Bitcoin’s outlook. Keith Alan, co-founder of Material Indicators, noted positive trading signals that suggest BTC is consolidating before its “next explosive move.” “Recovering the 21-Day Moving Average before the daily candle close was a positive sign,” Alan explained, adding that his proprietary tools support a continuation of the current bullish trend.
Sentiment data also highlights the growing divergence between crypto and traditional markets. The Crypto Fear & Greed Index climbed to 72/100, nearing “extreme greed” territory, while the equivalent index for stocks languished at 39/100, reflecting widespread fear.
Broader Market Reaction
Tom Lee, head of Fundstrat Research, called Nvidia’s crash an “overreaction,” labeling it a major buying opportunity. “Markets don’t like uncertainty, but this is a chance for investors,” Lee said on CNBC. Nvidia shares have already rebounded 5% in pre-market trading, and Nasdaq futures are up 1%, signaling a potential recovery.
Bitcoin’s next key level to reclaim is $105,000, which it briefly touched before the news of DeepSeek’s new AI tool. Meanwhile, markets are looking ahead to Wednesday’s Federal Reserve meeting, with expectations that interest rates will remain unchanged at 4.25%-4.50%.
As Bitcoin continues to outperform in a volatile environment, analysts see potential for further gains while cautioning that sharp corrections may occur as markets overextend.
