Weekly digest: Bitcoin surges to $64,000, while Chinese AI model Kimi K3 sparks panic in the chip market
The past week was eventful and contradictory. Bitcoin, starting with a drop to $61,000 amid geopolitical tensions and macroeconomic uncertainty, managed to recover and even update its local high. However, the main event that shook not only the cryptocurrency but also the traditional market was the release of the Chinese AI model Kimi K3, which triggered a sell-off in chipmaker stocks.
Bitcoin: From Fear to Cautious Optimism
The driver of Bitcoin's recovery was the US Consumer Price Index (CPI) data published on July 14. The core inflation rate, excluding food and energy, stood at 2.6% year-over-year, lower than the forecasted 2.8%. Inflation slowing more than expected is a powerful signal for the market. An additional catalyst was the positive rhetoric from Fed Chairman Kevin Warsh during his speech before Congress.
The local high was recorded on the evening of July 15 at $65,500, after which the asset entered a consolidation phase. On Friday, July 17, the crypto market declined in sync with traditional markets due to the crisis in the semiconductor sector, but by the weekend, Bitcoin had recovered its losses. At the time of analysis, the price stands at $64,500, representing a gain of about 1% over the week.
Dynamics in the top 10 were mixed: Ethereum strengthened by 4% to $1,850, while HYPE lost about 8%. Spot Bitcoin ETFs recorded a second consecutive "green" week, attracting $75.5 million in net inflows. The Fear and Greed Index rose to 28 points but remains in the "fear" zone, indicating cautious investor sentiment. The total market capitalization is $2.27 trillion, with Bitcoin dominance at 57%.
Political Battle Over the CLARITY Act
US Democratic Senators Chris Murphy, Jeff Merkley, and Chris Van Hollen opposed the current version of the CLARITY Act, which aims to delineate the powers of the SEC and CFTC in regulating digital assets. Their main demand is the inclusion of anti-corruption provisions that would prohibit the president, vice president, cabinet members, and members of Congress from owning or profiting from crypto businesses. This is a direct attack on the business interests of Donald Trump's family in the crypto sphere. Consideration of the proposal is expected starting July 20, and its adoption would require 60 votes — an extremely high bar.
BIP-110: A Stillborn Initiative
Over a two-week period, no major mining pool supported BIP-110, which restricts non-payment data in Bitcoin transactions. The adoption rate hovers around 1%, with 55% required. Critics of the initiative, including Michael Saylor and Adam Back, called it ineffective. Meanwhile, a developer under the pseudonym Leonidas presented an alternative client, DOG Mode, which increases the transaction limit and lowers the "dust limit" to simplify work with Ordinals and Runes. This solution does not require a majority vote — one miner is enough.
Kimi K3: The DeepSeek 2.0 Effect
Chinese company Moonshot AI released the Kimi K3 model with 2.8 trillion parameters, native vision, and a context of 1 million tokens. The developers claim that in aggregate benchmarks, it is second only to proprietary models Claude Fable 5 and GPT 5.6 Sol. However, the real shock came from the market reaction: on July 17, chipmaker stocks crashed worldwide. The Taiwanese index lost over 6%, the Japanese index 4%, and the Nasdaq fell by 1.5%. Shares of Chinese developer Z.ai plummeted nearly 30% in Hong Kong, while Nvidia temporarily ceded the title of the world's most valuable company to Apple. Investors compare the situation to the "DeepSeek effect," when in January 2025 a similar AI model launch led to a $590 billion loss in Nvidia's market capitalization in a single session.
My analysis: The release of Kimi K3 is not just a technological breakthrough but a signal that China is catching up with and, in some aspects, surpassing the US in the AI race. The panic in the chip market is driven less by the model itself and more by fears that American companies are losing their technological leadership. For the crypto market, this means increased volatility, especially in assets linked to the AI sector. Investors should prepare for new "DeepSeek effects" — such events will recur.