A Chinese AI startup triggered a broad market selloff after releasing a new model that raised fresh concerns about US semiconductor valuations.

Moonshot AI unveiled Kimi K3, sending chip stocks lower and weighing on risk assets. Bitcoin fell below $64,000, while Ethereum traded near $1,800, Solana hovered around $75 and XRP slipped toward $1.07.

Moonshot AI pressures tech and crypto markets

The market reaction followed a familiar pattern. The emergence of another competitive Chinese AI model prompted investors to reassess the valuations of US chipmakers, pulling semiconductor stocks and the broader Nasdaq lower.

DeepSeek caused a similar reaction last year. Weakness in technology stocks quickly spread across risk assets, including crypto.

Bitcoin declined 1.8% over the past 24 hours. Ethereum dropped 2.6%, while Solana fell 2.3%.

The losses remain limited, but they come as crypto sentiment is already fragile. The Crypto Fear and Greed Index currently stands at 27, placing the market in fear territory. The index was at 23 last week, indicating extreme fear.

Bitcoin remains stuck below its June high

Bitcoin has traded sideways since reaching an all time high in early June, with buyers unable to establish another sustained move higher.

The asset is down 0.9% over the past seven days. While the decline is modest, the lack of momentum has left Bitcoin vulnerable to weakness in broader markets.

The latest selloff also shows that Bitcoin remains closely tied to technology stocks and general risk sentiment. Despite its reputation as an alternative store of value, the asset continues to move alongside the Nasdaq during periods of market stress.

Performance across the broader crypto market has also remained weak. DeFi was the strongest sector over the past seven days with a flat return, while most other categories declined.

Fed meeting becomes the next major catalyst

Markets are now looking toward the Federal Reserve meeting expected in roughly two weeks.

The Fed’s rate decision and guidance could determine whether Bitcoin remains trapped below $64,000 or attempts to recover its recent losses. A cautious policy outlook could extend the current consolidation, while more supportive commentary could improve demand for risk assets.

Bitcoin is entering the meeting with weak momentum and sentiment near extreme fear. Another negative catalyst could push the asset below its current range, while a shift in macro expectations could provide the momentum needed for a recovery.