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Cryptocurrency Market Rebounds After Monday's DeepSeek-Induced Drop

Bitcoin, Ethereum, and other top digital assets posted modest gains as liquidations decreased sharply from Monday's spike.
By: Jona Jaupi • January 28, 2025
Cryptocurrency Market Rebounds After Monday's DeepSeek-Induced Drop

The cryptocurrency market experienced a modest rebound on Tuesday following a sharp downturn on Monday, sparked by the launch of China’s DeepSeek artificial intelligence (AI) model.

Bitcoin (BTC) is up 2.4%, currently trading at $102,200, recovering from a low of $100,000 earlier this week. Ethereum (ETH) also saw a slight uptick, rising 2% to $3,140, while XRP gained 7.6%, reaching $3.14. Solana (SOL) gained 2%, climbing to $2.31.

BTC Price chart
BTC Price

The total cryptocurrency market capitalization increased by 1.5%, reaching $3.61 trillion, according to CoinGecko.

In the past 24 hours, $224 million in liquidations occurred, with 91,878 traders affected, according to CoinGlass. Bitcoin and Ether accounted for about $55 million apiece. This marks a sharp decrease from Monday's nearly $1 billion in liquidations.

Despite the recent market volatility, Tuesday’s rebound highlights the resilience of the broader crypto sector. Experts note that the dip triggered by DeepSeek’s launch was brief, with investors now seeking opportunities to capitalize on discounted assets.

Bill Zielke, Chief Revenue Officer at BitPay, told The Defiant that DeepSeek’s release disrupted the tech landscape as it was coming off of significant investments in AI technology.

“While some may see it as a loss, others view this sharp price change as an opportunity,” he said. “Savvy, diamond-handed investors will seize this moment to acquire BTC at a discounted price.”

The DeepSeek Effect

Monday’s market decline followed the launch of DeepSeek, an AI model designed to rival Open AI’s ChatGPT. Experts believe the heightened competition in the AI industry shook investor confidence in tech stocks, which has had a ripple effect on the broader cryptocurrency market.

“The $1 billion in liquidations is a clear reminder that cryptocurrency intersects technological innovation and macroeconomics,” Zielke said. He emphasized that the crypto sector is navigating a more complex landscape, where both technological advances and shifts in investor sentiment are playing equally important roles.

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