Price of Bitcoin DeepSeek’s, an artificial intelligence start-up from China, upset Wall Street’s preferred narrative.
Introducing an open-source AI model called DeepSeek R1, the startup’s researchers claim that the model can outmatch OpenAI’s most advanced reasoning systems—at a fraction of the cost.
Use a Learn new things with this novel methodDeepSeek R1’s cost to execute queries is 98% less than OpenAI’s flagship model. It also costs much less than OpenAI’s GPT and rival models. Microsoft, Meta, Tesla and other tech giants are due to announce their quarterly earnings this Wednesday. This could make the huge sums spent on AI by these companies look even more questionable.
As U.S. stock markets opened on Monday, the tech-heavy Nasdaq plunged by 3.5%. Bitcoin was trading at $99,600 after a drop of 5% over the previous day.
Some traders had suffered the consequences. While DeepSeek AI threatened to disrupt a week filled with tech earnings, data showed that crypto liquidations had exceeded $966 million in the last day. CoinGlass.
The SEC announced that it would be regulating crypto assets. This announcement was followed by President Donald Trump’s inauguration last week. Crypto task force Also, a decision is made to rescind a controversial accounting rule. The president also paved the way for a “digital asset stockpile," Establishment a Presidential Working Group via executive order.
The digital asset market has been based on hope.” Standard Chartered’s Global Head of Digital Assets Research Kendrick Geoffrey wrote in a recent note.
He described Trump’s executive order as ultimately a disappointment because it implied a crypto stockpile would be built using seized digital assets, as opposed to directing the government to start “Staple sats” by buying up Bitcoin (the smallest unit of Bitcoin is a satoshi, or 1/100,000,000 BTC).
Bitcoin’s correlation to the Nasdaq, which has been strengthening since late December, could thrust Bitcoin’s price into risky territory over the short-term, Geoffrey wrote Monday.
“Now, the risk is that Nasdaq will continue to liquidate its shares during U.S. trading session. […]We then start approaching other BTC levels.” he explained, identifying $96,400 as the average purchase level for spot Bitcoin ETFs post election—which may be a tipping point.
Even though the crypto market has held on to a sizable portion of its post-election games, Monday’s pressure may stem from its overall perception as a risk asset class.
As the crypto industry matures, GSR Research Analyst Carlos Guzman told Decrypt that Bitcoin could trade more like gold based on the asset’s perception as a store of value. However, investors have predominantly viewed Bitcoin and crypto as speculative assets, he said.
“This correlation has been further strengthened by the increasing institutionalization and institutional investors’ grouping of crypto with high-growth technology assets.” Guzman said.
While DeepSeek’s AI model may not have direct implications for the crypto market, Guzman said it appears that digital assets have been caught up in Big Tech’s crossfire.
Andrew Hayward edited the book