Bitcoin and other altcoins like Bonk experienced a sea of red on Monday as investors dumped high-risk assets. BTC plunged below the support at $100,000, while many altcoins did worse.
Memecoins like Bonk, Pepe, and Floki plunged by over 20%. Other top laggards were coins like Solana, Pudgy Penguins, and Celestia. So, should holders of these altcoins sell, continue holding, or buy the dip?
Why Bitcoin, Bonk, Pepe, and Floki plunged
There are three main reasons Bitcoin and these altcoins plunged. First, the success of DeepSeek sent jitters across the stock market, leading to the collapse of many popular stocks, like NVIDIA and AMD. NVIDIA’s market cap crashed by over $600 billion.
Cryptocurrency investors often remain under pressure when there are jitters in the stock market since they are often seen as risky assets. In an emailed statement to BanklessTimes, Petr Kozyakov, the CEO of Mercuryo, said:
“Chinese artificial intelligence startup DeepSeek appears to have spooked tech stocks as its success suggests it is possible to build AI models that cost less than AI incumbents in the US.”
Bitcoin and these altcoins also plunged ahead of the Federal Reserve and European Central Bank decisions. Economists see these banks maintaining a more hawkish tone, which would also hit cryptocurrencies.
Further, many big-tech companies like Microsoft, Apple, Meta Platforms, and Amazon will publish their financial results. Weak numbers by either of these companies may lead to more downside in the crypto industry.
Time to Buy, Hold, or Sell Bitcoin and Altcoins?
Crypto analysts have a mixed outlook on Bitcoin and other altcoins. Arthur Hayes, a popular crypto investor, warned that Bitcoin may crash to a low of $70,000. He then expects it to rebound and hit $250,000 later this year.
On the other hand, Anthony Pompliano, another popular crypto investor, warned that investors were misunderstanding DeepSeek’s impact on AI. He then recommended that investors should not get emotional and sell.
Technicals suggest that Bitcoin’s price may have a deeper correction, since it has formed a double-top chart pattern, as shown below. That could be a sign that the coin may drop to below $90,000 in the next few days, a move that will pull other altcoins lower.
History suggests that February and March are some of the best months for cryptocurrencies, and this trend may happen this year. Also, recent data shows Bitcoin experiences big weekly gains whenever it drops on Monday.
Therefore, Kozyakov advises that altcoin holders with losses exceeding 50% from their peak should maintain their positions. He believes that these coins will ultimately bounce back when this shakeout ends.
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