Bitcoin experienced a sharp decline of nearly 6% in the last 24 hours, falling briefly below $98,000. This drop occurred despite a significant development on Friday when President Donald Trump announced the formation of a crypto policy group set to shape the countrys crypto industry within six months.

Market experts are now cautioning that further losses may follow.

Financial Crisis Looms

BitMEX co-founder Arthur Hayes predicts a turbulent path ahead for Bitcoin, expecting a correction to between $70,000 and $75,000 due to a mini financial crisis.

Despite this, he remains bullish on Bitcoins long-term outlook, projecting a rally to $250,000 by the end of the year, driven by renewed monetary stimulus.

I am calling for a $70k to $75k correction in $BTC, a mini financial crisis, and a resumption of money printing that will send us to $250k by the end of the year.

Bitcoins recent plunge was attributed to a broader market sell-off triggered by the rising popularity of the China-based artificial intelligence app DeepSeek. The apps performance, which rivals OpenAIs models with lower chip requirements, has raised concerns among investors, prompting a risk-off sentiment.

Bitcoin, which surged past $70,000 in November following Donald Trumps election victory and subsequent pro-crypto initiatives, remains closely tied to the US stock market. Its price tends to move in tandem with high-growth tech stocks, which have benefited from the AI boom since 2022. However, DeepSeeks advancements have created fears of a shift in the market, which ultimately led to sharp declines in crypto prices.

Market analyst Adam Kobeissi described the latest sell-off as a reaction to investor uncertainty driven by DeepSeeks disruptive potential.

Bitcoins Failed Head-and-Shoulders Pattern

Data shared by crypto analyst Ali Martinez shows the failure of a head-and-shoulders pattern in Bitcoins price action, suggesting a bullish outlook for the worlds largest cryptocurrency. In his latest tweet, Martinez indicates that this pattern breakdown points to a potential upside target of $122,000 following the invalidation of the bearish setup and the subsequent possibility of significant upward momentum.

The failure of this head-and-shoulders pattern suggests a potential upside target of $122,000 for #Bitcoin $BTC! pic.twitter.com/vMTfoaRNSO

Martinez also drew parallels between BTCs current price action and its 2015-2018 market cycle. In his latest observation, the analyst noted that historically, Bitcoin tended to go parabolic around this stage of the cycle.