Chinese AI Startup DeepSeek Triggers Global Market Turmoil

Why US Stock Market is Crashing? | CoinGape

The crypto market also crashed, losing 7% of the market cap and Bitcoin dropping to $98.9k. Today marks the day of intense volatility, with all major and minor stocks experiencing significant drops, resulting in the US Stock market crash. Although many industry analysts and giants have predicted this, the impact is far bigger than most expectations, wiping out billions within a few hours. However, no macroeconomic or political event is driving this drop. Instead, a newly launched China's AI bot, DeepSeek, has crashed the global market, which includes crypto. Let's discuss. The biggest reason behind the US Stock market crash is a Chinese AI startup, DeepSeek, which has shaken the entire Artificial Intelligence and financial markets. Until now, the biggest contributors to the AI industry were OpenAI, Apple, Microsoft, and other US giants. However, the introduction and success of Chinese AI has created a wave. Its low budget, high functionality, and other features made US investors question the ever-growing AI bubble, leading to a sell-off. DeepSeek is a free, open-source AI model built in just two months and under a budget of just $6M. This is lower than the bigger contributors like ChatGPT, which spends nearly $6B annually, whereas the others, like Google, have a $51B expenditure in 2025 and much more. This difference shocked the netizens, triggering a mass sell-off in the stock market, further developing into a crash. This began with the NASDAQ 100 dropping by 236 points in a single trading day, followed by other stocks. According to StockTwits, the Stock market crash is on track to erase a trillion dollars from the market, ruining the performance of all the major companies. This includes the popular crypto stock tank, like NVDA, whose stock valuation is $142,62 after a 3% decline, popular Bitcoin supporter Microstrategy (MSTR) stock price is $343.67 after a 5% drop, and much more. Note: The stock values have recovered significantly from their low points. The impact of this stock market crash is also visible in the crypto market, where the tokens have faced significant declines, losing 7% of the global market cap in just a day. The cryptocurrency market often mirrors other financial and traditional markets, especially during periods of high volatility. This is due to the building of fear among investors and macroeconomic narratives. Today, the crypto market drop wiped out 7% of its market cap. The biggest impact was on the Bitcoin price, which dropped by 5% to $98.9k. The value of many other altcoins plummeted to 8-10%. According to an earlier CoinGape report, the most concerning cryptocurrency price drops are in Ethereum, XRP, Solana, and others. These drops have put investors' portfolios at significant risk, but the increased trading volume indicates that users are taking this crypto market crash as a buying opportunity. Such market corrections often occur in the financial market, where investors' sentiments play the biggest role. In such situations, experts insist that crypto investors maintain calm and keep holding their assets until the market recovers instead of panicking. Considering the high trading volume in the crypto market, this indicates that investors are buying digital assets during a crash to benefit from upcoming recoveries. Additionally, the DeepSeek AI model success reveals the development of the industry, which could assist in better services and products in less span and less budget. Once the sentiments settle, the US stock market and the adjacent markets may witness recovery.

$850M Crypto Flash Crash Sparks Debate Over DeepSeek's Market Impact

AI and meme tokens were among the biggest losers, fueled by the Chinese AI app launch. On Monday, the crypto market saw its first flash crash of 2025 as Bitcoin (BTC) and most altcoins registered double-digit declines. The crypto crash wiped $850 million in leverage positions across the market and $269 billion from overall capitalization. The flash crash also registered the first massive decline post-Donald Trump's inauguration as the 47th President, and market observers have tied the recent crash to the Trump administration and the launch of Chinese AI bot DeepSeek, created at a fraction of the cost of OpenAI's ChatGPT. Crypto Bloodbath Wipes $850M Over the past 24 hours, crypto leverage traders have collectively lost over $850 million in liquidations, with long traders losing the most. According to data from Coinglass, 312,846 traders were liquidated for a total of $851.44 million. Long traders collectively lost over $790 million, while short traders lost $59 million. Bitcoin leverage traders were among the biggest losers, accounting for $260 million of the total liquidation, followed by Ethereum (ETH) traders with $110 million. The liquidation surge was aided by memecoin traders betting heavily after Trump's inauguration. The Bitcoin price declined by over 10%, falling from a daily high of $105,277 to a new multi-week low of $97,785. Ethereum price recorded a similar slump, falling from a daily high of $3,343 to a multi-week low of $3,024. On the other hand, memecoin recorded a much broader decline, with Dogecoin (DOGE) falling over 15%, PEPE recording a 30% decline, and the newly launched Trump memecoin falling over 20% due to the market-wide route. A few market pundits blamed the overleveraged market, especially the meme sector, while others believe the Chinese AI app launch triggered the crash in the traditional stock market. This crash has trickled down to crypto due to the growing influence of institutional investors in the crypto market. Chinese DeepSeek Launch To Blame? Crypto market observers believe the crypto market bloodbath has trickled down from the stock market crash, fueled by ChatGPT rival DeepSeek's launch. The impact of the DeepSeek launch was evident in focused, traditional companies, such as Nvidia and crypto AI tokens. Most AI tokens lost over 20% of their market value over the past 24 hours, while a few saw declines between 50% to 70%. DeepSeek is a Chinese AI app that has shocked the American market. The Chinese AI app rose to the top of the Apple App Store's free software rankings. ChatGPT's Chinese rival was reportedly developed for a mere $5.5 million budget compared to billions of dollars poured into ChatGPT. The launch and success of the app created panic among investors, who now see many tech stocks in the United States as overpriced. The U.S. stock market's significant selling resulted in widespread losses, which later trickled down to the crypto market. The Trump administration has focused especially on advancing crypto and AI. The President announced a $500 billion investment in the American AI ecosystem and signed several pro-crypto executive orders, tying the two nascent tech sectors together.