Crypto AI Crashes Because of DeepSeek, What to Do?

Bittime - Chinese AI startup DeepSeek has disrupted the market by creating AI models that are much cheaper than those offered by Silicon Valley giants. The sharp decline in AI coin occurred at the start of Monday's Asian market trading, along with a sharp decline in Nasdaq 100 futures which plunged 330 points in the previous night's trading, triggering further panic in the market.

Drastic Drop in AI Coin

Today, AI coins such as NEAR, NCP, RENDER, and FIL experienced significant drops of between 8-10%. This happened after an AI startup from China, DeepSeek, challenged US dominance in this sector.

Read too Check Today's Crypto Market

Why is AI Coin experiencing a decline?

The AI ​​coin market has seen a decline of more than 7% in the last 24 hours, with the total market capitalization of these coins falling below $44 billion, according to CoinMarketCap. This decline is largely due to the increasing popularity of startup DeepSeek which offers low-cost infrastructure. 

DeepSeek uses chips that are much cheaper than those used by AI companies in the US, causing a major shift in the market.

Read too DeepSeek Janus Pro: A New Competitor to OpenAI's Dall-E

Opportunity to Buy on a Downturn

Despite the correction in the AI ​​coin, experts from the decentralized finance market (DeFAI) believe that this is an opportunity to buy amidst the dip. A well-known market analyst, Daniele, believes that the presence of DeepSeek will actually encourage further growth in the AI ​​coin industry. 

Analyst Comments On AI Coin Narrative

“If you sell AI coins because of DeepSeek's cheap and open source model, it actually helps a lot to expand AI applications to millions of users at an affordable price,” Daniele said in a post on X on January 26. “This is the best thing that could happen for the industry,” he added.

DeepSeek Rocks the Market

This AI startup from China has challenged the giants of Silicon Valley. While companies like OpenAI and Anthropic spend more than $100 million to train advanced AI models like GPT-4 or Claude, DeepSeek managed to achieve similar results for just $6 million. Additionally, DeepSeek uses less advanced AI chips than those used by US companies.

Impact on US Chip Stocks

Chip stocks in the US experienced a decline as the DeepSeek application topped the Apple Store download rankings. Companies like Qualcomm, Nvidia, Arm, and Broadcom saw declines between 2-7%, in line with the decline in AI coins.

DeepSeek Threatens OpenAI's Dominance

This Chinese AI startup quickly attracted attention, ranking as the top free app in the Apple App Store. Users praise the app for its ease of use and smooth performance, with no significant issues regarding usage restrictions.

Discussions regarding the possibility of using DeepSeek in agentic AI systems are starting to emerge. 

The Future of AI is Agentic AI

Nvidia, as one of the major technology companies, claims that agentic AI is the future of the AI ​​industry, which can drive many advances in this field. DeepSeek's entry into the market could shift some market share away from OpenAI.

Additionally, last week, OpenAI's popular product, ChatGPT, experienced a major outage, which increasingly sparking conversation among users.

Read too What are AI Agents: Definition, How They Work, and 10 Best Crypto AI Agents 2025

Conclusion

With this continually developing situation, it is important for investors to remain vigilant and conduct in-depth analysis before making investment decisions.

FAQ about DeepSeek's Impact on AI Coin

1. What caused the recent drop in AI coins?

The decline in AI coins was caused by the emergence of Chinese AI startup DeepSeek, which offers AI models at much lower costs compared to large companies in Silicon Valley. This triggered panic in the market, especially after a sharp decline in Nasdaq 100 futures.

2. Is this a good time to buy AI coin?

Some experts, including market analyst Daniele, believe that this dip could be an opportunity to buy AI coins. They argue that DeepSeek's presence could drive further growth in the AI ​​coin industry, despite the current correction.

3. How will DeepSeek impact large AI companies like OpenAI?

DeepSeek has begun to shift market share from larger companies like OpenAI by offering more affordable and easy-to-use applications. Apart from that, the disruption experienced by ChatGPT also adds to the challenge for OpenAI in maintaining market dominance.

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Reference

Danica Jovic, AI Coins Crash As DeepSeek AI Shakes Up The Market, Accessed January 28, 2025

Author: IN