DeepSeek triggers a decline in the US stock and cryptocurrency markets. Will there be a bull market in 2025?
Source: Talking Li, Talking Outside
Yesterday (January 27), the market was quite volatile, with Bitcoin dropping to around $97,750 near the lower boundary of the channel, as shown in the figure below. As of the writing of this article, the price has returned above $100,000.
In just the past 24 hours, 193,697 people were liquidated, with a total liquidation amount of $539 million, primarily affecting long positions. As shown in the figure below.
For those who were liquidated, we can only express deep sympathy, but for the market, liquidations can lead to a healthier environment. In fact, during such volatile market conditions, the usual pattern continues: those in panic keep selling off, while those optimistic continue to accumulate in batches.
This situation likely caught many off guard; on the eve of the Spring Festival, a domestic large model, DeepSeek, can cause a significant earthquake in the global financial market. When U.S. stocks opened on Monday, they were dragged down, causing the total market value of the top ten tech companies in Nasdaq (such as Nvidia, Broadcom, Microsoft, etc.) to shrink by nearly $1 trillion at the opening.
According to popular opinions online, the development cost of DeepSeek was only $6 million, while ChatGPT's investment was significantly larger (they raised $17.9 billion for development). In this contrast of costs, DeepSeek has already surpassed ChatGPT in recent days, becoming the number one application in the App Store, raising concerns in the U.S. about China's AI capabilities rapidly developing with fewer resources. The efficiency and quick adoption of DeepSeek also highlight the growing threat to the U.S. technology dominance.
As a result, the crypto market has naturally been impacted, and I noticed some people on social media starting to shout "bear market." Whenever the market drops, these people claim Bitcoin will go to $70,000, and whenever the market rises, they say Bitcoin will go to $200,000. However, it seems that most of the partners in the group have already become accustomed to this volatile market, instead passionately discussing and trying out the new AI dark horse, DeepSeek.
So, is there still hope for the market ahead? Can we still see a bull market this year?
For ourselves, in the articles over the past few days, we have expressed relatively positive views, indicating that we still see opportunities for the overall performance of the crypto market from the first quarter to the second quarter of this year. The market is still in a bull phase. As for those calling for a bear market, I don't know what they are thinking; I have never seen a bear market where Bitcoin consolidates at around $100,000.
So far, I believe the overall trend of the market still leans towards a typical bull market, and a typical bull market is never a straight line up. One thing to note is that in this cycle, Bitcoin has moved from around $15,000 to now around $100,000, and the risks may increase as we move forward. At this point, in addition to maintaining our existing patience, we also need to exercise extra caution.
Opportunities are relative; for some, they are opportunities, while for others, they may represent higher risks and traps.
In recent days, I have continuously received messages in the background asking about altcoin issues, and it is clear that some partners are really anxious and a bit panicked, even feeling a bit desperate. However, I can understand this because for partners holding a lot of altcoins (some even leveraged loans to invest in altcoins), it is indeed not easy to hold on until now.
For example, one partner entered the market last year with 1.6 million RMB, believed a certain KOL's words, and directly went all in on an altcoin. As a result, now it has dropped to less than 200,000. Selling at a loss feels unsatisfactory, but holding on is a daily torment…
Then, this partner messaged me asking if there was a quick way to break even; as long as he could recover his capital, he would exit the crypto space and never play again. But for such situations, I really don't have any instant remedies. In other words, if I could easily make 1.4 million from a 200,000 capital in a short time, I wouldn't have been hoarding Bitcoin all these years; I would have sold my house to go all in.
I remember we repeatedly reminded in our articles that for newcomers, the two most important principles to remember after entering this field are: preserve your capital and don't touch what you don't understand.
But the reality is that many people only understand the meaning of these two simple principles after they have paid "tuition" to the market with real money. Some may understand after losing tens of thousands, some may need to lose hundreds of thousands to understand, while others may lose everything and still fail to comprehend.
If we look back at the 2021 bull market, we can also find that before the final parabolic rise of Bitcoin and the altcoin season, there were at least three significant fluctuations. As shown in the figure below.
Each fluctuation was to deleverage and shuffle, which is a necessary path for the market to rise. It's like riding a roller coaster; if you want to see the brief beauty at the peak, you must be light on your feet and buckle your seatbelt.
At the same time, you also need to consider your position and risk preference. For someone like me, who has a relatively low-risk preference, I certainly do not pursue the feeling of hitting the highest point. Although I can see the price of $120,000, I also do not oppose Bitcoin reaching $150,000 this year, but I will still choose to start releasing my positions in phases at $100,000.
Exploring the highest scenery with a cost of $100,000 is completely different from enjoying the higher scenery with a zero-cost remaining position. Because I have experienced both feelings, I now prefer and enjoy the ease brought by the latter.
Of course, that said, while we used the 2021 bull market as an example, history does not repeat itself; it may only be similar. As for how high Bitcoin's price can go this year and how many rounds of significant reshuffling the market will undergo before reaching the highest price, these are all unknowns. This year's bull market cycle is entirely different from past cycles. At this stage, we still have many potential catalysts (key driving factors) that have not been confirmed, such as:
The implementation of U.S. regulations on cryptocurrencies
The new altcoin ETFs to be launched this year
Expectations for the Federal Reserve to cut interest rates
Some countries' potential strategic reserves of Bitcoin
The issue of increased market liquidity
The layout of major institutions in the RWA field
And so on…
The recent global sensation, DeepSeek, is just a small episode. In the crypto field, the real upward momentum seems to be brewing, and we need to wait for a new breakout point. However, this process will definitely be tortuous, and we do not rule out the possibility of new black swan events that could directly crash the market. The best strategy to cope with market fluctuations is to continue to manage our positions and control risks strictly.
Today, Hui said something in the group that I think is very vivid and fits here: People in the crypto space are constantly torn between hope and despair, between persistence and giving up.
In short, we are still in a bull market, but according to existing cyclical patterns, we are definitely no longer at the beginning of the bull market cycle, nor at the end of it. As for those KOLs who confidently claim that the bull market has just begun or that we have already entered a bear market, we do not make any rebuttals. Everyone has the freedom and right to express their personal views on their media channels. As for which viewpoint you resonate with more, that is subjective.
Here, we still maintain our previous views: In February of this year, we may welcome a new round of rebound. If no new surprises (black swan events) occur, let us continue to welcome Bitcoin at $110,000. At that time, I will personally sell 10% of my position according to the established plan. (Of course, if I am wrong, it won't affect me much; I will strictly follow my trading discipline and continue to hold the remaining position.)
Additionally, yesterday in the group, I saw a partner share a statistical data regarding altcoins: The market already has over 36.4 million crypto tokens, and the speed of creating new tokens is accelerating. It is expected that by 2025, the number of crypto tokens will exceed 100 million. As shown in the figure below.
In comparison, there were less than 3,000 altcoins during the 2017-2018 period and less than 500 tokens during the 2013-2014 period.
This is just the variety of tokens. If we also consider the high FDV low circulation new projects born in this cycle, along with a large amount of unlocking that will continuously flow into the market, it will lead to two serious problems:
It will cause oversupply (supply exceeds demand)
It will directly dilute market liquidity (especially in a market where liquidity is already insufficient)
As I said, if you are still hoping for a season where everything skyrockets like during the 2021 bull market, you are destined to lose more, mainly due to the two points mentioned above. However, we still believe that there will be opportunities for an altcoin season this year, but only a few fundamentally strong altcoins will have the chance to see higher increases (or break historical highs). As for which areas we are optimistic about this year, this has already been outlined in the article from January 1 on Talking Li, and interested partners can look back at the historical articles.
Today happens to be New Year's Eve, and before we know it, almost a month of 2025 has passed. Some describe that one day in the crypto space is like a year in the human world, and one day on the chain is like a year in the crypto space; the changes in this circle are indeed too fast. Others say that there is nothing serious; we can talk about it after the New Year.
Different choices will lead to different results. In fact, whether in life or investment, things may not always go as we wish, but dissatisfaction is also a choice of its own. As long as you are sure of yourself and have chosen the right direction, then just go for it. Only your own experiences will help you grow and become stronger, and only your own achievements can accompany you for a lifetime; any opinions or evaluations from others are temporary.
Whether losing money or making money, it is just a comparison of two different situations in one's life. In fact, life is indifferent to luck or misfortune. Instead of envying or being jealous of others, it is better to live well in the present, do 1-2 things you like, and as long as today's self is better than yesterday's self, that is enough.
In the brilliant river of time
We have entered the world of crypto
Winter goes and spring comes again
Amidst the wind, flowers, snow, and moon, we laugh
In 2025, we
Will not forget our original intention
Forge wisdom in challenges
Seize value in opportunities
Empower life through trading
Feel joy in life
In the new year
May you ride the winds and waves
Reap prosperity and freedom
