Deepseek is crashing the Crypto market?

Deepseek is crashing the Crypto market?

Deepseek is crashing the Crypto market?

Jan 29, 2025

Deepseek is crashing the Crypto market?
Deepseek is crashing the Crypto market?

"DeepSeek's rapid growth shakes the crypto market, triggering a billion-dollar crash in Bitcoin, AI-related tokens and tech market,". These were the words expressed by Hassan Shittu, a prominent crypto analyst who is shocked at the recent developments of DeepSeek.

DeepSeek’s rise is unexpected. What was once a relatively less-known Chinese startup has quickly sent shockwaves through the crypto world, causing significant declines.

DeepSeek’s AI Shake-Up: A Threat to Big Tech and Crypto?

DeepSeek has entered the AI battlefield with a bang. Its R1 model, developed for a mere $5.6 million, is giving U.S. giants like OpenAI a serious run for their money. Compared to the multi-billion-dollar investments in Western AI, DeepSeek’s cost-effectiveness is raising eyebrows—and concerns.

Investors are watching nervously, and the crypto market has already felt the impact.

DeepSeek and its Influence on the Crypto Price Decline

If we take a look at the overall crypto market at the moment, we get reminded of the age old saying - things can change in an instant. Let’s take a look at how Bitcoin(BTC) reacted, which can also give us an idea about the overall crypto market.

On Jan 27th, 2025, BTC declined to below the $100,000 mark. It dropped straight to $99,359. Analysts put forth a multitude of reasons behind this, including “profit taking” following a recent rally but DeepSeek has been cited as the larger factor.

So, let's take a look at the broader market sentiment. It is mixed, with short-term holders showing caution, while long-term holders remain optimistic. Factors like significant liquidations and fluctuating trading volumes are the main culprits.

Investors have reacted sharply to the forecasts put forward by analysts, which were only multiplied by DeepSeek’s emergence.

Is the Fear of the Loss of American Dominance in AI Behind This?

Analysts think that there is a deeper fear lurking in the market- the fear that American dominance in AI is over.

Investors have suddenly hit the brakes after pouring billions into AI ventures. They think that if DeepSeek could achieve similar breakthroughs as OpenAI at the fraction of the costs, was all that spending justified? This doubt has created a ripple effect affecting both tech stocks and cryptos.

Stocks Suffering Declines

Mining stocks took the hardest hit.

Riot Platforms, Cipher Mining, Core Scientific, and TeraWulf shares declined by 20-30%.

Even companies that had hedged their bets with AI-driven hosting solutions, such as Hut 8 and Iris Energy, weren’t spared.

DeepSeek’s Rise has Triggered a Renewed US-China Tech Rivalry

DeepSeek! This rising star in the AI space is causing a stir that stretches from Silicon Valley to Beijing and pretty much everywhere in between. Let’s just say, its success isn’t just a tech story anymore; it’s a geopolitical drama. The US-China tech rivalry? Oh, it’s officially been dialed up to 11. DeepSeek isn’t just winning; it’s delivering top-tier AI at prices so low, it’s got everyone wondering if the current investment strategies in tech are, well, a little out of date.

But hold on, let’s not start hoarding canned food just yet. Some folks are giving the market’s overreaction a side-eye. Goldman Sachs? They're over here saying, "Relax, people, it’s just a market correction." Apparently, everyone’s flipping out a little too soon. Peter Oppenheimer, the bank's chief equity strategist, is reminding us that the tech sector's hold on the global economy isn’t just smoke and mirrors. It's actually based on some pretty solid fundamentals.

So, if you’re tempted to join the panic party, Oppenheimer’s got some advice: “Take a breather, chill, and maybe consider adding some more stable assets to your portfolio. Like bonds. Or mid-sized U.S. stocks.” Yeah, those might not give you the thrill of a rocket-fueled AI startup, but they won’t give you whiplash either.

A Dip in Bitcoin Prices Can Lead to Opportunities

So Bitcoin is down, but as a trader, you should smell the opportunities in front of you. Using platforms like Solus Finance, which offer an AI-powered trading platform can mean wonders for your fortunes as a trader. Try out their crypto options trading and take advantage of the market.

Remember, when prices drop, you can always buy Bitcoin and wait for the market rebound. Solus Finance can help you take advantage of the rebound by offering a sleek platform and trading products like crypto options trading.

Solus Finance has partnered with TradingView for its charting technology. A comprehensive trading and investing platform offering valuable market insights, analytical tools and financial news to track Bitcoin USD and many others.

All systems normal

© 2024 Solus | An ITU Global Financial Inc. Company. All rights reserved.

Solus Finance has partnered with TradingView for its charting technology. A comprehensive trading and investing platform offering valuable market insights, analytical tools and financial news to track Bitcoin USD and many others.

All systems normal

© 2024 Solus | An ITU Global Financial Inc. Company. All rights reserved.

Solus Finance has partnered with TradingView for its charting technology. A comprehensive trading and investing platform offering valuable market insights, analytical tools and financial news to track Bitcoin USD and many others.

All systems normal

© 2024 Solus | An ITU Global Financial Inc. Company. All rights reserved.

Solus Finance has partnered with TradingView for its charting technology. A comprehensive trading and investing platform offering valuable market insights, analytical tools and financial news to track Bitcoin USD and many others.

All systems normal

© 2024 Solus | An ITU Global Financial Inc. Company. All rights reserved.

Solus Finance has partnered with TradingView for its charting technology. A comprehensive trading and investing platform offering valuable market insights, analytical tools and financial news to track Bitcoin USD and many others.

All systems normal

© 2024 Solus | An ITU Global Financial Inc. Company. All rights reserved.