- DeepSeek AI launches with big promises over artificial intelligence development.
- Despite a promising future, AI coins saw an intensive selloff amid a broader market rout.
The crypto market saw a huge plunge in the early hours of Monday’s trading session, causing declining prices for Bitcoin (BTC), altcoins, and AI coins. The market decline comes after China’s Artificial Intelligence (AI) startup DeepSeek released low-cost AI models, rivaling GPT-4 and Claude.
AI Coins Reacts to DeepSeek’s Bold Move
DeepSeek, which is focused on developing open-source large language models, recently released its R1 model. This model, a relatively new field of AI research, can automatically learn and improve itself without human supervision.
DeepSeek said it used 2,048 Nvidia H800s and $5.6 million to train a model with 671 billion parameters. This is only a fraction of what OpenAI and Google spent to train comparably sized models.
DeepSeek’s R1 release sparked an unexpected frenzy among AI coins. Within the last 24 hours, the total market capitalization of AI coins plummeted by 13.3% to $36 billion. Data from CoinGecko shows that top AI coins have collapsed an average of 8% to 10%. The value of Near Protocol (NEAR), Internet Computer (ICP), and Render (RENDER) decreased by 10.7%, 9.7%, and 14.5%, respectively.
The Nasdaq 100 futures also suffered a 330 points drop in the overnight trading session on Sunday. Furthermore, chip stocks, including Qualcomm (QCOM), Nvidia (NVDA), Arm (ARM), and Broadcom (AVGO), are all down 2 to 7% today, exacerbating the AI coin decline.
Notably, this correction comes as part of the broader crash in the crypto market. Bitcoin, the leading crypto, dropped below the crucial support of $100,000 levels on Monday. As of this writing, BTC price was trading at $99,293, down 5.37% in the last 24 hours and 8.53% in the past week.
Top altcoins, including Ethereum (ETH), Solana (SOL), and XRP, also experienced declines of 7.3%, 11.7%, and 10.6%, respectively.
DeepSeeking Competes With OpenAI’s Market Dominance
Nonetheless, experts in the Decentralized Finance Artificial Intelligence (DeFAI) market see the current correction in AI coins as an opportunity for industry expansion. They claim investors can leverage the opportunity for investors to buy the dip, which can lead to market maturation.
Popular market analyst Daniele advised participants not to sell their AI tokens due to DeepSeek’s dominance. The analyst emphasized that DeepSeek models help scale AI Apps to millions of users with low-entry barrier pricing.
DeepSeek’s R1 model currently ranks on Apple’s iPhone download charts. Users have commended the DeepSeek API for its easy-to-use interface and flawless performance. They added that rate limits pose no substantial hurdles, spurring debate over possible integration with agentic AI systems.
Previously, chip maker Nvidia hailed Agentic AI as the big development and key innovative frontier in artificial intelligence. Thus, one can argue that DeepSeek could directly reduce OpenAI’s market share, valued at $10 billion.
The discussion has further soared as OpenAI’s ChatGPT faced a strong outage last week. Despite this setback, OpenAI is pushing its innovative boundaries, recently signing a partnership deal with President Donald Trump. As CNF discussed earlier, the project involved SoftBank and Oracle to develop AI infrastructure in the United States.
