In the last two days before the start of work in 2025, Bit briefly fell below $92,000, with $2.028 billion in liquidations across the network in the past 24 hours, including $1.766 billion in long liquidations and $270 million in short liquidations. Additionally, in the past 24 hours, a total of 700,594 people were liquidated globally, with the largest single liquidation occurring on Binance - ETHUSDT, worth $25.635 million.
Since the Chinese New Year holiday this year, Bit has experienced several sharp short-term declines. Below is a summary by BlockBeats of the market reasons for Bit's decline, for readers' reference only.
DeepSeek Triggers a "Mini Financial Crisis"
On January 27, the domestic AI large model DeepSeek topped the US App Store, surpassing ChatGPT and attracting global attention from the tech, investment and media industries. As DeepSeek's performance is comparable to expensive cutting-edge large models like OpenAI's, but its training cost is less than $6 million, it has shaken the foundation of the AI industry, which has long believed in "miracles through hard work", and is seen by the financial sector as a black swan event that triggered the financial crisis.
On January 29, several US officials responded to the impact of DeepSeek on the US, stating that DeepSeek is "theft" and that a national security investigation into its impact is underway. The day before, US President Trump had described DeepSeek as a very positive technological achievement. On February 2, Cathie Wood, CEO of ARK Invest, said in an interview that DeepSeek proved that success in AI does not require so much money, and has accelerated the collapse of costs.
Affected by DeepSeek, Nvidia fell 5.3% on the day, the Nasdaq fell more than 400 points, and the US stock market lost nearly $1 trillion in value. As a risky asset, Bit and Altcoins were also impacted, with Bit falling 4.4% and ETH falling 3.8% on the day. After a week of repair, the market performance is still weak and has plummeted again this Monday. The future trend of the Altcoin market may need further observation of the performance after the US stock market opens.
Trump Administration Tariffs Take Effect
The tariff stick that Trump promised during his presidential campaign in the US has also been gradually implemented in recent days. On February 2, the US government announced that it will impose a 25% tariff on imports from Canada and Mexico. US President Trump signed a tariff order that day, imposing an additional 25% tariff on imports from Canada and Mexico, and a 10% tariff on energy resources from Canada. The tariffs are scheduled to take effect on the 4th. The White House said that if retaliatory tariffs are imposed on the US, the US may increase the tariff intensity.
Previously, on the 1st, Trump signed an executive order to impose a 10% tariff on goods imported from China. The White House said that for all goods imported from China, the US will impose an additional 10% tariff on top of the existing tariffs. Trump said this is in line with the "protectionist measures" he supports.
On the 3rd, Trump also said he would "definitely" impose new tariffs on the EU. He again complained about the US trade deficit with the EU and believed that the EU's imports of US cars and agricultural products are insufficient. Trump did not specify the tariff level or timetable. He told the media, "I won't say there's a timetable, but it will be very soon."
According to a Bloomberg report, BTC Markets CEO Caroline Bowler said: "Trump's tariff policy is affecting the entire market, and concerns about a trade war and stagflation-induced recession are spreading to the Altcoin and Bit markets." Affected by the tariff news, BTC once fell to around $91,000, the lowest level in more than two weeks. However, Bitwise Alpha's chief strategist Jeff Park also said that Trump's trade tariff policy will push up the Bit price in the long run, as it will weaken the US dollar in the global currency market and lower US Treasury yields.
El Salvador Cancels Bit's Legal Tender Status
On January 30, according to Cointelegraph, the El Salvador Congress has quickly passed legislation to amend its Bit law to comply with the International Monetary Fund (IMF) agreement. Ruling party MP Elisa Rosales said the amendment aims to ensure Bit's "permanent status as legal tender" and promote its "actual application".
On February 2, the El Salvador Congress (controlled by the ruling party) quietly passed an amendment to the "Bit Law", canceling Bit's status as the official currency, making its use entirely dependent on individual choice. This reform was made under the pressure of the IMF over the past two years, which made the approval of a $1.4 billion loan conditional on the El Salvador government "reducing the risks of Bit".
El Salvador was the first country in the world to make Bit legal tender, and now it has also become the first country to abandon this policy. Bit is no longer "currency" in El Salvador, and its use is completely voluntary. The members of Congress amended 6 articles of the "Bit Law" and repealed 3 articles (the law had a total of 16 articles since its implementation). From now on:
· Bit is no longer considered "currency", and merchants are no longer required to accept Bit payments.
· Its use becomes voluntary and no longer has legal tender status.
· The government will no longer accept Bit for tax payments.
Although the ruling party reluctantly accepted this amendment, they did not publicize it extensively. Despite President Bukele's very active presence on social media, he has not commented on this so far. However, on-chain data shows that El Salvador is still accumulating Bit, adding 5 BTC in the past 24 hours on February 1, bringing its total holdings to 6,055.18 BTC, worth $618,113,096. Previously, on January 20, El Salvador added 11 BTC ($1,113,508). And on January 14, according to a Bitcoin Magazine report, El Salvador's senior Bit advisor Max Keiser revealed that President Bukele is preparing to install Bit nodes in every household in the country.
Welcome to join the official BlockBeats community:
Telegram subscription group: https://t.me/theblockbeats
Telegram discussion group: https://t.me/BlockBeats_App
Twitter official account: https://twitter.com/BlockBeatsAsia
