Here’s why DeepSeek crashed your Bitcoin and crypto
The Bitcoin price dropped 6% on Jan. 27 following the debut of China's open-source AI model, DeepSeek, which spooked US markets. The model's low-cost development at under $6 million poses a challenge to American AI firms, prompting significant losses in tech stocks and a ripple effect in the cryptocurrency market. Major cryptocurrencies like Bitcoin and Ether saw declines of 6% and 7% respectively. Crypto experts noted that despite the lack of direct ties between crypto and DeepSeek, the market sentiment caused widespread sell-offs. Industry analysts point towards a persistent correlation between crypto and equities. While prices stabilized post-drop, some analysts remain optimistic, highlighting DeepSeek's potential to drive AI development forward. However, privacy concerns regarding DeepSeek's ties to China may hinder its market presence. Despite the turbulence, many believe that technologies like DeepSeek will provide more efficient AI systems, impacting the trading landscape in the long run.
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