DeepSeek AI Shakes Markets: Bitcoin Dips Below $100,000 Amid Tech Selloff

Could Bitcoin See A Deeper Dip On The DeepSeek AI Shock?

A crypto trader noted that markets digested the DeepSeek news only after U.S. markets opened. The launch of DeepSeek, a low-cost Chinese large language model, is putting pressure on the markets, sending Bitcoin BTC/USD back below $100,000 on Monday. What Happened: DeepSeek's launch on Jan. 20 rippled through to global markets on Monday, as the Chinese AI system, developed for just $6 million, outperforms OpenAI's vastly more expensive ChatGPT. According to cryptocurrency influencer The DeFi Edge, this development challenges the perception of U.S. tech dominance, triggering sell-offs in overvalued U.S. tech stocks like Nvidia and Microsoft. The Nasdaq 100 dropped 2%, and the crypto market, often correlated during crashes, followed suit. Meme coins also took a hit, with Trump TRUMP/USD and Dogecoin DOGE/USD losing 10% and 9%, respectively. Additional pressures include The Bank of Japan raising interest rates to a 15-year high, contribute to market uncertainty. Also Read: DeepSeek Sparks AI Carnage As Magnificent Seven, Broadcom Lose Nearly $900 Billion In Value: Why This Expert Is Still 'Bullish' On US Tech What Experts Are Saying: Bob Elliott of Unlimited Fnds noted that "much of the move is concentrated in the various AI names that have powered U.S. tech stocks higher." This sharp downturn in US markets contrasts with more muted reactions globally, with European stocks down just over 1% and Chinese stocks showing minimal movement in either direction. Interestingly, the commodities market has remained relatively stable amid the turmoil. Elliot observed that crude oil prices have been flat, while copper was "only down modestly." Gold, after an initial dip, has recovered to trade flat for the day, benefiting from falling U.S. bond yields. Elliot suggests that these market dynamics are primarily "US stock centered, and particularly US tech stock focused rather than a broad based challenge to global growth." He points out that markets had been pricing in "euphoric growth" for 2025, with high expectations for tech earnings and accelerated growth across other sectors. The analyst concludes by questioning whether this market downturn could be significant enough to impact the real economy, stating, "More needed, but this could be the start." What's Next: Michael Saylor's MicroStrategy Plummets Over 5% In Pre-Market As Chinese AI Startup DeepSeek Sends Shockwaves Through Crypto Universe: BTC Falls 5%, Dipping Below 100K Image: Shutterstock $BTCBitcoin$99886.13-2.63%WatchlistOverview$DOGEDogecoin$0.3244-3.43% This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Market News and Data brought to you by Benzinga APIs

China's DeepSeek AI Surprise Pushes Bitcoin Under $98K as Nasdaq Tanks - Decrypt

The price of Bitcoin dipped below $98,000 Monday after DeepSeek, a Chinese artificial intelligence startup, threw a wrench into Wall Street's favorite narrative. Introducing an open-source AI model called DeepSeek R1, the startup's researchers claim that the model can outmatch OpenAI's most advanced reasoning systems -- at a fraction of the cost. Using a novel learning method, running queries with DeepSeek R1 is 98% cheaper than OpenAI's flagship model, and it also purportedly cost much less to train than OpenAI's GPT models and other rivals. That could put mountains of cash spent on AI development by tech giants under scrutiny, with Microsoft, Meta, and Tesla set to report earnings Wednesday. The tech-heavy Nasdaq, which coasted on a wave of AI hype to all-time highs last year, plunged 3.5% when U.S. markets opened Monday. Showing a 5% decrease over the past day, Bitcoin's price had fallen to $99,600, as of this writing. For some traders, the damage had already been done. As DeepSeek's AI model threatened to upend a busy week of tech earnings in the U.S., crypto liquidations had topped $966 million over the past day, according to data from CoinGlass. President Donald Trump's inauguration took center stage last week, with the crypto market moved by the SEC's subsequent announcement of a crypto task force and decision to rescind a controversial accounting rule. The president also paved the way for a "digital asset stockpile," establishing a Presidential Working Group via executive order. "Digital asset prices have been trading on hope," Standard Chartered's Global Head of Digital Assets Research Kendrick Geoffrey wrote in a recent note. He described Trump's executive order as ultimately a disappointment because it implied a crypto stockpile would be built using seized digital assets, as opposed to directing the government to start "stacking sats" by buying up Bitcoin (the smallest unit of Bitcoin is a satoshi, or 1/100,000,000 BTC). Bitcoin's correlation to the Nasdaq, which has been strengthening since late December, could thrust Bitcoin's price into risky territory over the short-term, Geoffrey wrote Monday. "The risk now is that if Nasdaq liquidation continues during the U.S. session [...], then we start to approach other key levels for BTC," he explained, identifying $96,400 as the average purchase level for spot Bitcoin ETFs post election -- which may be a tipping point. Even though the crypto market has held on to a sizable portion of its post-election games, Monday's pressure may stem from its overall perception as a risk asset class. As the crypto industry matures, GSR Research Analyst Carlos Guzman told Decrypt that Bitcoin could trade more like gold based on the asset's perception as a store of value. However, investors have predominantly viewed Bitcoin and crypto as speculative assets, he said. "The increasing institutionalization of crypto assets through crypto ETFs has further reinforced this correlation, with institutional investors often grouping crypto alongside high-growth tech assets in their portfolios," Guzman said. While DeepSeek's AI model may not have direct implications for the crypto market, Guzman said it appears that digital assets have been caught up in Big Tech's crossfire.

Bitcoin, Ethereum, Solana Crash -- Here's Why China's Low-Cost AI Model DeepSeek May Be To Blame

Despite DeepSeek's success, reliance on Western semiconductors and geopolitical hurdles remain significant challenges for Chinese AI. Chinese AI startup DeepSeek's $6 million AI model has rattled global global markets, with experts warning it signals a major shift in AI competition. What Happened: Speaking with Benzinga, experts suggest the Chinese startup's efficiency-focused approach is reshaping perceptions of dominance in artificial intelligence, challenging the high-cost strategies employed by US tech giants like OpenAI and NVIDIA NVDA. The model, R1, was developed for under $6 million, according to the company, and has outperformed established competitors in several tests. Its open-source approach has triggered concerns about the future competitiveness of US technology firms and their spending-heavy AI strategies. The announcement sent jitters through the markets, with the Nasdaq Composite dropping 2.7%, the S&P 500 sliding 1.6%, and the Dow Jones Industrial Average dipping 0.1%. DeepSeek's claims of achieving high-performance AI at a fraction of Silicon Valley's costs have raised fears of an AI stock bubble bursting. Crypto markets succumbed to the pressure as well. Bitcoin BTC/USD slid about 5.5% in trade today, trading at $99,450, while Ethereum ETH/USD was trading down 7% in trade at $3,070. Other major altcoins like Solana SOL/USD, BNB BNB/USD, Dogecoin DOGE/USD and Cardano ADA/USD were trading down 11%, 3.5%, 9% and 8.5%, respectively. Also Read: MicroStrategy's Bitcoin Buying Spree Continues, Accumulates Over 10,000 BTC What Experts Are Saying: Azeem Khan, co-founder of Morph, called DeepSeek a disruptor, likening its strategy to China's democratization of smartphones in the 2010s. "DeepSeek proves that scaling AI doesn't need hundreds of billions of dollars. By cutting costs, they're challenging the West's dominance in the field," he said. Khan also highlighted that China's open-source approach, backed by state resources, signals a significant departure from Western prestige projects. "DeepSeek showcases China's ability to disrupt industries with precision and efficiency," he added. Mario Casiraghi, co-founder of Singularity Finance, noted that DeepSeek's architecture -- focused on reinforcement learning and efficiency -- delivers comparable performance to GPT-4 while undermining the competitive edge of companies like NVIDIA. "This challenges the assumption that high compute costs are necessary for dominance, creating jitters in the equity and crypto markets," he explained. DeepSeek represents a broader strategic shift in Chinese AI, prioritizing efficiency, state coordination and real-world application. Dariia Porechna, Head of Protocol at Autonomys, emphasized that DeepSeek's success reflects a new wave of Chinese innovation. "This is not just about technology. It's a strategic message: China can compete globally while overcoming resource constraints," she said. However, challenges remain. Ken Timsit, Head of Cronos Labs, pointed out that China's reliance on Western semiconductor technology and global trust deficits could limit its ability to capture significant market share in Western countries. "Foundational models are just one part of the equation. Fine-tuning, inference infrastructure, and geopolitical concerns will play critical roles," Timsit said. Read Next: Bitcoin Flash-Crashes To $98,000 On China AI Fears, Trump Disappointment Image: Shutterstock $BTCBitcoin$99491.12-3.02%WatchlistOverview$ADACardano$0.9041-5.10%$BNBBNB--%$DOGEDogecoin$0.3213-4.36%$ETHEthereum$3075.00-4.88%$SOLSolana$226.65-5.76%NVDANVIDIA Corp$118.99-16.6%Market News and Data brought to you by Benzinga APIs

Is AI Tech Rout Amid DeepSeek Saga A Win For IBIT & Trump's Bitcoin Push?

Bitcoin and broader crypto market crashed today amid DeepSeek's rising popularity. DeepSeek is creating waves across the segment of Artificial Intelligence (AI), and is most interestingly raising questions about opportunities that it brings to the world. At the top is a way in which DeepSeek could help in Donald Trump's Bitcoin push while aiding BlackRock's IBIT. Besides, it has also sparked a wider selloff in the global market, challenging US dominance in the tech sector. Is DeepSeek an Opportunity? DeepSeek, China's open-source AI research lab, is being called a 'Sputnik moment' for the US. Notably, the broader financial market recorded a massive selloff today as China's AI startup DeepSeek has made headlines with its low-cost efficacy. However, MacroScope said that the current tech market rout could benefit the Trump Administration to further push its Bitcoin strategy, thereby, making it a national priority. Bitcoin advocate James Lavish has backed this sentiment by saying that anyone who is selling Bitcoin (BTC) has no idea about what they own right now. Notably, the majority of the crypto community has assumed that the introduction of DeepSeek puts digital assets like Bitcoin at risk of being sold off. Such anticipation has led to the crypto market crash as US stock futures tied to the S&P 500 have also slipped 1.30%. Nevertheless, many see this as an opportunity to accumulate Bitcoin since it is at a low value in the market. How This AI Tech Rout Can Aid Trump's Bitcoin Push? US President Donald Trump has signed a key executive order to develop the National Digital Asset Stockpile while also reaffirming at Devos that he is going to make the US a crypto capital. The AI tech rout amid the rise of DeepSeek can be leveraged to continue accumulating BTC at a lower value. It will also help strengthen Donald Trump's commitment to establishing a Strategic Bitcoin Reserve. This is indeed a boon as the Federal Reserve has hinted at keeping the rate unchanged after it concludes a 2-day meeting on Wednesday. Bitcoin price plummeting because of the AI rout supports the sentiment to invest in riskier assets. More investors adding Bitcoin to their portfolios only goes on to give it more credibility and adoption across the US and other regions. How Can It Be a Win For IBIT? BlackRock's IBIT is leading the inflows for Spot Bitcoin ETFs with a historical cumulative total of $39.72 billion as of Jan 27. Chances are, fund allocation to Spot Bitcoin ETF will be led by IBIT as the DeepSeek rise picks a momentum and crypto investors look to allocate their funds to a safer option. That said, Ali Martinez, also known as Ali Charts, has sided with OpenAI. He has said that he did give DeepSeek a try but ChatGPT was still his top choice. This has signaled to the community that any downside that DeepSeek or the AI tech rout has created is temporary with scope for cryptocurrencies to rebound eventually. Besides, MicroStrategy acquired BTC worth $1.1 billion, and this is further strengthening the confidence of the crypto community.