Today, cryptocurrencies linked to artificial intelligence suffered sharp losses, mirroring the general sell-off in U.S. stocks. The market crash was triggered by the decline in indices that Bitcoin and other cryptocurrencies correlate to.
The decline followed news that China-based AI model DeepSeek offers capabilities comparable to major language models from OpenAI, Google and Meta at a fraction of the cost.
Leading AI-focused cryptocurrencies were among the hardest hit, with Near Protocol (NEAR ($4.53)), Internet Computer (ICP ($8.64)), Render (RENDER), and Artificial Superintelligence Alliance (FET ($1.09)) seeing daily declines of 8%, 9%, 10%, and 11%, respectively. The sell-off reflects growing investor concerns about the potential disruption DeepSeek poses to established AI companies and their blockchain integrations.
The U.S. stock market also reflected the turmoil, with tech stocks leading the losses. The Dow fell 369 points (0.8%), the S&P 500 fell 2% and the tech-heavy Nasdaq fell 3.6%, its worst day since September 2022. Nvidia (NVDA), a major player in artificial intelligence hardware, bore the brunt of the selling, falling 12% to around $124 in early trading.
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“The blockchain and AI fields are fundamentally different because they are driven by unique use cases and long-term innovations,” Kazmierczak said. He said collaborations like OpenAI’s Operator AI agent and DeepSeek models have the potential to revolutionize crypto AI projects in the near future.
Bitget COO Vugar Use Zade echoed this sentiment, attributing the market volatility to broader macroeconomic factors.
“Advances like DeepSeek’s AI models often trigger short-term adjustments, especially when paired with current pressures like U.S. interest rate decisions and the upcoming FOMC meeting,” Zade said. “The effects of technological disruptions tend to stabilize over time as ecosystems adapt.”
DeepSeek’s model stands out for its efficiency, with a low cost of $0.14 per million input tokens, compared to $15 for OpenAI’s GPT-4.
JPMorgan analyst Sandeep Deshpande suggested that the emergence of DeepSeek could be a turning point in AI investment strategies.
*This is not investment advice.
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