At the start of the week, the cryptocurrency market experienced a sharp decline. Bitcoin lost more than 5.55% in value, dipping below $100,000, while altcoins such as Ethereum and Solana saw even steeper drops. Analysts cite the emergence of the Chinese startup DeepSeek as one of the primary factors driving this correction. Details follow below.
DeepSeek and Its Market Impact
DeepSeek, a Chinese startup, shocked the industry by developing a powerful AI model on a shoestring budget of just $10 million. The company utilized idle GPUs to slash model training costs by 96%. By comparison, OpenAI spends $60 to process 1 million tokens, while DeepSeek does so for $2.19.
The DeepSeek app quickly became a sensation, topping download charts in the U.S. Apple Store and Google Play. However, its meteoric success triggered panic among investors in tech companies — especially those producing GPUs, like NVIDIA — which, according to experts, also influenced the crypto market.
Tech Giants Under Pressure
NVIDIA shares fell by 8%, Google by 3.2%, Amazon and Microsoft by 3.5%, and Nasdaq 100 futures slid by 2%. Investors appear concerned about the return on investment in AI startups, especially given the low-cost yet highly effective solutions proposed by DeepSeek.
The AI sector may see significant shifts, as DeepSeek’s technology lowers the entry barriers for new players, potentially threatening the dominance of large companies and changing the competitive landscape.
Mass Liquidations and Expert Commentary
Bitcoin and other cryptocurrencies declined in tandem, leading to a surge in liquidations. Over $699 million was lost by traders in 24 hours, with $236 million of that tied to Bitcoin. Ethereum dropped 8.61%, while Solana tumbled 12.69%.
According to Santiment, despite this dip, the Ethereum network registered more than 206,000 new addresses in a single day — the highest jump since October 2022 — pointing to sustained interest in the platform despite short-term challenges.
