- Bitcoin dipped below $100,000 amid a stock market meltdown triggered by DeepSeek’s AI innovation
- Nvidia shares plummeted by over 11% due to competition from DeepSeek’s cost-effective AI model
- DeepSeek’s AI model developed at a fraction of the cost compared to US tech giants, causing a $1 trillion market value wipeout
Bitcoin began on a down note during the last week of January. Today, January 27th, the world’s largest digital asset by market capitalization traded below the $100,000 margin, reaching as low as $97,906 during the early hours of this Monday.
Currently, Bitcoin is valued at $99,133 according to CoinMarketCap, down over 5% over the last 24 hours. While a retraction was expected, this major downward movement was a tad more significant than what the market anticipated.
Especially given that only a week ago Bitcoin reached its all-time highest value of $108,168, pumped by market positivism from Donald Trump’s Presidential inauguration.
Crypto Market Influenced by Stock Meltdown
The reason why Bitcoin and other digital assets began the week on a down note is not inherent in the cryptocurrency market itself but by major events happening in the U.S. Stock market.
A Chinese AI company by the name of “DeepSeek” completely shook Wall Street after launching a new innovative AI model to compete with Silicon Valley giants in the artificial intelligence field.
The most notable case was Nvidia Corporations’ shares (NVDA), which collapsed by over 11% in value during pre-market trading hours. The company, known for its graphics card manufacturing, has been investing heavily in AI development such as AI inference platforms, generative AI models, and AI foundation models for its products.
DeepSeek’s new AI model was considered groundbreaking by the market, particularly due to its low production costs. While other companies have been investing tens of millions of dollars in their AI model development units — the Chinese firm developed its latest model at a modest cost of $10 million.
OpenAi, the private company responsible for ChatGPT has a market capitalization of of over $157 billion, while DeepSeek is worth only a small fraction of that value.
Overall, the Chinese firm’s innovative AI model was partially responsible for a $1 trillion wipeout from the stock market today. The reason is that when faced with the incredibly low production costs by the Chinese competitor, American investors likely came to the conclusion that American companies were far over-valued, leading to this significant flee of capital.
While this had little involvement from the cryptocurrency market, the significant capital drought seen on Wall Street led to other risky markets also suffering the consequences.
In recent years, this has become a norm as Bitcoin and publicly traded companies have been tying their financial trajectories together. This is especially true when discussing artificial intelligence development, as AI and cryptocurrency mining or development rely heavily on advanced computing power and data processing capabilities.
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