Shares of Michael Saylor‘s MicroStrategy Inc MSTR fell over 5% in pre-market trade after Bitcoin BTC/USD prices plunged below $100,000 following a drop in U.S. index futures.
What Happened: The fall in cryptocurrencies and equities intensified as China’s DeepSeek became the number one downloaded application on Apple Inc.’s App Store over the weekend.
DeepSeek introduced an AI model that demonstrates capabilities with a significantly reduced cost. This development challenged the prevailing assumption that massive GPU investments are essential for high-performing AI.
Furthermore, Bitcoin and its levered play MicroStrategy fell as CME futures opened and its FedWatch tool projected a 99.5% probability of no change in interest rates for the upcoming Jan. 31 Federal Open Market Committee (FOMC) decision. The probability of having no change in the rates was at 65.6% for March and 44.4% for May.
Another concern clouding the MSTR stock stemmed from a report in the Wall Street Journal, which stated that the 2022 Inflation Reduction Act’s corporate alternative minimum tax could impose a 15% tax on the unrealized gains of a Bitcoin holdings company.
Why It Matters: While DeepSeek’s development is causing a market-wide panic, no ease in interest rate signals liquidity constraints in the market.
Additionally, six of the total ‘Magnificent Seven’ stocks are slated to report earnings this week, there are several factors at play in the U.S. market.
"It is still early to assess potential risk for U.S. tech companies as it remains to be seen if DeepSeek will prove to be a viable, cheaper alternative in the long term and if they can consistently innovate, take a leadership position in the sector which can be sustained," said global macroeconomic expert and market strategist, Anish Nanda to Benzinga.
Price Action: At the time of writing this article MSTR was down more than 5% in pre-market, while Bitcoin was also 5.1% lower at $99,259 per coin.
About 12 analysts tracked by Benzinga have a consensus ‘buy' rating on the stock with a price target of $449.5 per share.
The most recent analyst ratings between Benchmark, and Bernstein imply an 87.85% upside for MSTR.
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Photo courtesy: MicroStrategy
© 2025 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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