AI Coins Crash Big As Chinese AI Startup DeepSeek Storms Market
Highlights
- AI coin market cap dropped by 7.66% to below $44 billion earlier today.
- DeepSeek's low-cost AI models, rivaling GPT-4 and Claude at just $6 million in development costs, have shaken Silicon Valley
- NEAR, ICP, RENDER, and FIL, saw sharp declines of 8-10% as US AI dominance comes under threat.
- Analysts see this as a "buy-the-dip" moment, emphasizing that DeepSeek's affordability could help scale AI applications.
AI Coins took a severe beating in the early trading hours of the Asia market on Monday, as China’s AI startup DeepSeek stormed the market by building AI models that cost just a fraction of what the Silicon Valley behemoths are spending. Top artificial intelligence coins like Near Protocol (NEAR), Internet Computer (ICP), Render (RENDER), and Filecoin (FIL) have collapsed 8-10% today as the Nasdaq 100 futures see a 330 points crash in the overnight trading session on Sunday.
AI Coins Crash As Investors Panic
The AI coins market has tanked by more than 7.66% in the last 24 hours with the total market cap falling under $44 billion, as per data from CoinMarketCap. The data further shows that top AI coins have collapsed an average of between 8-10%.
Notably, this correction comes as part of the broader crypto market crash as the Bitcoin price drops all the way to the crucial support of $100K levels.
The major reason behind this is the sharp surge in the popularity of China’s DeepSeek AI startup which has stormed the market due to its low-cost infrastructure. Furthermore, it is built using chips that cost just a fraction of what the US AI companies have spent. As a result, the Nasdaq 100 Futures have collapsed over 2% to more than 470 points.
However, experts from the decentralized finance artificial intelligence (DeFAI) market believe that the current correction in AI coins presents a buy-the-dip opportunity. Popular market analyst Daniele explained how DeepSeek’s dominance will rather help the AI Coin industry expand further. He wrote:
“If you’re selling AI coins due to DeepSeek models being cheap and open source, they are actually very helpful to scale AI Apps to Millions of users with low-entry barrier pricing. Is the best thing that could have happened to the industry”.
China’s DeepSeek AI Model Storms Market
The Chinese AI startup has taken the Silicon Valley tech behemoths to task. Training advanced AI models like GPT-4 or Claude typically demands massive budgets, with companies like OpenAI and Anthropic spending over $100 million on computing alone. These efforts rely on massive data centers filled with thousands of GPUs, each costing upwards of $40,000—akin to needing a dedicated power plant to fuel a factory.
On the other hand, the Chinese AI startup has turned heads by achieving comparable or superior performance to GPT-4 and Claude for a fraction of the cost i.e. just $6 million. Furthermore, it’s built using AI chips that are far less advanced than what US AI companies have been using. Former BitMEX CEO Arthur Hayes has questioned the US AI dominance noting:
“A thot: what if the rise of Deepseek causes global investors to question US exceptionalism. What if they question y they are over weight US tech vs the world and why they are over weight US bonds vs the world?”
As the DeepSeek app takes the top spot in downloads on the Apple Store, chip stocks in the US have given an overnight reaction. Top companies like Qualcomm (QCOM), Nvidia (NVDA), Arm (ARM), and Broadcom (AVGO) are down by 2-7% today, further intensifying the AI coins dip.
Chip Stocks Overnight Reaction to DeepSeek:
1. Arm, $ARM: -5.5%
2. Nvidia, $NVDA: -5.3%
3. Broadcom, $AVGO: -4.9%
4. Super Micro, $SMCI: -4.6%
5. Taiwan Semi, $TSM: -4.5%
6. Micron, $MU: -4.3%
7. Qualcomm, $QCOM: -2.8%
8. AMD, $AMD: -2.5%
9. Intel, $INTC: -2.0%US markets are…
— The Kobeissi Letter (@KobeissiLetter) January 27, 2025
Challenging OpenAI’s Market Dominance
The AI Coins dip comes as the Chinese AI startup is making lightning-fast inroads into the global AI market and is already the 1st ranking free app on the Apple App Store. Users have praised the DeepSeek API for its user-friendly experience and seamless performance, noting that rate limits pose no significant hurdles. This has sparked discussions about its potential integration into agentic AI systems.
Previously, tech giant Nvidia hailed Agentic AI as the next major breakthrough in artificial intelligence, representing a key frontier for innovation in the field. Thus, it would not be an understatement to say that the Chinese player would be directly eating into the market share of $10 billion worth OpenAI. Notably, the discussions further soared as OpenAI’s ChatGPT faced a strong outage last week.
DeepSeek has emerged as a leading performer in the AIME, MATH-500, and GPQA benchmarks, as shown in recent results. While ChatGPT maintains its edge in coding benchmarks, the performance gap between the two is rapidly shrinking.
The swift development of DeepSeek highlights the growing challenge to U.S. AI dominance, signaling a shift in the global AI landscape. As a result, the AI coins market will also face some turbulence moving ahead as the broader crypto market adjusts to these developments.
- Polymarket Founder Shayne Coplan Teases Potential POLY Token After $2B ICE Deal
- FOMC Minutes Signal Fed Open to More Rate Cuts This Year, Bitcoin Bounces
- North Dakota To Issue ‘Roughrider’ Stablecoin Following Wyoming’s Footsteps
- Ethena Labs and Jupiter Partner to Launch JupUSD Stablecoin on Solana
- BlackRock’s Bitcoin ETF Leads ETFs With $3.5B Weekly Inflows as It Eyes $100B in AUM
- Bitcoin Price Prediction as US Govt. Shutdown Extends- What’s Next for BTC?
- Solana Price Megaphone Points to a Parabolic Move as SOL Treasuries Near $3B
- XRP Price Prediction Amid ETF Approval Roadblock as Analyst Warns of $2.72 Dip
- Binance Coin Price Prediction If It Surpasses Bitcoin Marketcap— Is $3000 Possible in 2025?
- ASTER vs HYPE Price Analysis – Which Perp DEX Token Looks Poised to Dominate Q4 Performance?
- Ethereum Price Could Soar to $6,500 as BlackRock’s ETF Nears $20B Milestone
Why Trust CoinGape
CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights Read more…to our readers. Our journal analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.
