tl;dr
The release of China’s DeepSeek R1, an affordable AI model, has caused significant turmoil in the cryptocurrency and AI markets. Investors fear its efficiency could devalue established AI firms, leading to a selloff. This has also impacted the crypto market, with Bitcoin hitting an 11-day low and va...
DeepSeek R1 AI Model Launch Rattles Confidence in AI and Crypto Markets
Cryptocurrency market turmoil following DeepSeek R1 AI model release - Major AI tokens suffer losses as DeepSeek R1 disrupts AI and crypto sectors. The release of China’s DeepSeek R1, an affordable AI model, has caused significant turmoil in the cryptocurrency and AI markets. Investors fear its efficiency could devalue established AI firms, leading to a selloff. This has also impacted the crypto market, with Bitcoin hitting an 11-day low and various AI tokens suffering losses.
DeepSeek Upsets AI Sector
DeepSeek’s disruptive entry into the global AI landscape sent shockwaves across tech and crypto. Unlike more established models such as those offered by OpenAI, which require billions in funding, the Chinese developed DeepSeek for just $6 million, with its capabilities said to rival top-tier systems. The model’s debut now has investors fearing its affordability and efficiency could undermine the valuation of established AI firms and related stocks. This sentiment was evident as Nvidia, a critical supplier of AI chips, saw its stock tumble by 8.5%. The ripple effect also extended to the crypto space, with Bitcoin dipping to an 11-day low, dragging other tokens with it. Almost all currencies in the AI category have suffered losses to varying degrees in the last 24 hours.
Major AI Tokens Not Spared
More well-known AI tokens such as NEAR Protocol (NEAR) and Internet Computer (ICP) were not spared either. NEAR registered an 11.1% drop, with its price going from an intra-day high of $5.04 to a low of $4.41, per data from CoinGecko. Meanwhile, ICP’s 24-hour loss stood at 8.5%. Across seven days, the damage was much more significant, with the coin shedding more than 18% of its worth. Overall, the AI category is down 13.3% since yesterday, with the combined value of its 548 tokens dropping to about $36.2 billion. Its 12% plunge over the last week means it has performed markedly worse than the broader crypto market, which is down 7.7%.