- Bitcoin and the crypto market risk an extended correction after Chinese artificial intelligence startup DeepSeek went live.
- BTC's current decline mirrors a similar change in the stock market with the NASDAQ dropping over 3%.
- DeepSeek has overtaken ChatGPT as the highest-rated free application on Apple’s US App Store.
Bitcoin (BTC) slipped below $100,000 on Monday as China-based artificial intelligence (AI) model DeepSeek began gaining popularity across the US market, overtaking OpenAI's ChatGPT. DeepSeek's impact also led to rapid declines in the stock market with NASDAQ — spearheaded by Nvidia — diving more than 3%.
Bitcoin, crypto market dip as DeepSeek gains ground
The crypto market experienced turbulence following the rise of China's new AI startup, DeepSeek, which is trending across the global investment market.
DeepSeek, a newly launched AI chatbot and potential rival to OpenAI's ChatGPT, caught users' attention one week after the release of its open-source language model, R1, on January 20. It tops the chart as the highest-rated free app for US and Chinese users on the Apple App Store.
The hype around DeepSeek began after ScaleAI's CEO Alexandr Wang commended its effectiveness compared to leading US AI models like OpenAI's ChatGPT.
The popularity of DeepSeek led to a market-wide sell-off in US tech stocks and the crypto market. A major cause of this decline is the alleged low cost it took to build the model.
The Chinese AI company claims to have spent only $5.8 million to train its models, which is very tiny compared to its US counterparts. For example, OpenAI has raised a total of $17.9 billion so far to build its models.
Another bone of contention is that DeepSeek allegedly uses fewer chips to build faster and better AI models. Several top tech personnel, including Wang and Tesla CEO Elon Musk, have disagreed with this notion.
Wang stated in an interview with CNBC that he believes China has 50,000 H100 Nvidia chips.
"My understanding is that DeepSeek has about 50,000 H100s, which they can't talk about obviously because it is against the export control that the United States has put in place," Wang told CNBC.
Following the interview, US tech stocks plummeted with Nvidia (NVDA) shedding over $600 billion from its market capitalization in the past 24 hours. Additionally, the S&P 500 wiped out over $1 trillion from its market cap, while the NASDAQ dipped 3% over the same period.
Considering the rising correlation between the US stock market and cryptocurrencies, the crypto market plunged with Bitcoin diving below $100K for the first time since President Donald Trump's inauguration.
If the traditional stock market fails to recover, BTC's price could remain range-bound or decline further due to their rising positive correlation. This could also hinder the much anticipated crypto bull run in 2025.
However, the market could see a recovery if DeepSeek uses more AI chips and higher costs than it claims.
Meanwhile, meme coins named after DeepSeek quickly rallied with the surge in interest for the AI bot.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
PEPE Price Forecast: PEPE could rally to double digits if it breaks above its key resistance level
Pepe (PEPE) memecoin approaches its descending trendline, trading around $0.000007 on Tuesday; a breakout indicates a bullish move ahead.
Tron Price Prediction: Tether’s $1B move triggers TRX ahead of US Congress stablecoin bill review on Wednesday
Tron price defied the broader crypto market downtrend, surging 3% to $0.25 on Monday. This bullish momentum comes as stablecoin issuer Tether minted another $1 billion worth of USDT on the Tron network, according to on-chain data from Arkham.
Ethereum Price Forecast: Short-term holders spark $400 million in realized losses, staking flows surge
Ethereum (ETH) bounced off the $1,800 support on Monday following increased selling pressure from short-term holders (STHs) and tensions surrounding President Donald Trump's reciprocal tariff kick-off on April 2.
BlackRock CEO warns Bitcoin could replace US Dollar as global reserve currency, crypto ETFs witness inflows
BlackRock CEO Larry Fink stated in an annual letter to investors on Monday that the US national debt could cause the Dollar's global reserve status to be replaced with Bitcoin if investors begin to see the digital currency as a safer asset.
Bitcoin: BTC remains calm before a storm
Bitcoin's price has been consolidating between $85,000 and $88,000 this week. A K33 report explains how the markets are relatively calm and shaping up for volatility as traders absorb the tariff announcements. PlanB’s S2F model shows that Bitcoin looks extremely undervalued compared to Gold and the housing market.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.