DeepSeek AI's Rise Crashes Bitcoin & Crypto Markets Below $100K
The rise of China’s DeepSeek AI shakes global markets as Bitcoin dips below $100K, mimicking the tech stock slide led by Nvidia.
By Tylt Editorial Team
DeepSeek overtakes ChatGPT as the top-rated free app in the US and China.
Bitcoin and the crypto market plunge alongside a 3% drop in the NASDAQ index.
DeepSeek's low-cost AI model stirs debate and sparks meme coin rallies.
The cryptocurrency market faced significant turbulence as the newly launched Chinese AI startup, DeepSeek, gained widespread traction. Known for its innovative approach and low-cost AI development, DeepSeek surpassed ChatGPT to become the highest-rated free application in the US and China on the Apple App Store, just a week after launching its open-source language model, R1.
This rapid success stirred excitement and controversy, drawing praise from ScaleAI CEO Alexandr Wang, who highlighted its capabilities over leading US AI models. However, the resulting market reaction was far from positive. Bitcoin (BTC) fell below $100,000 on Monday, mirroring a broader sell-off in the US stock market, where the NASDAQ index dropped by over 3%. Tech giant Nvidia bore the brunt of this downturn, losing over $600 billion in market capitalization within 24 hours.
The stock and crypto market declines were partly attributed to skepticism surrounding DeepSeek's claims of efficiency. The startup reported training its model for just $5.8 million—a fraction of the $17.9 billion invested by OpenAI in its models. Critics, including Elon Musk and Alexandr Wang, questioned these claims, pointing to DeepSeek’s alleged access to 50,000 Nvidia H100 chips, which would breach US export control regulations.
The controversy and fear of competition sent shockwaves through the market. Bitcoin, which often mirrors trends in the tech sector, suffered a similar fate as traditional stocks. The broader crypto market also dipped, raising concerns that if the stock market doesn’t recover, the crypto space could face an extended period of stagnation or decline.
Despite these challenges, some pockets of the market saw a surprising upside. Meme coins inspired by DeepSeek witnessed rapid gains, fueled by heightened interest in the AI startup. Analysts suggest the market may stabilize if DeepSeek’s development costs and chip usage align more closely with industry norms. Until then, the effects of DeepSeek’s debut continue to ripple across global markets, leaving traders and investors on edge.
