Cryptocurrency Market Tumbles 7% Following Release of Chinese AI Rival to ChatGPT
![Cryptocurrency Market Tumbles 7% Following Release of Chinese AI Rival to ChatGPT](/_next/image?url=https%3A%2F%2Fcdn.sanity.io%2Fimages%2F6oftkxoa%2Fproduction%2Fb6510c1d62a7c328d223d44e52c11fae67a1abc0-1555x875.png&w=1200&q=75)
The global cryptocurrency market has plunged nearly 7% in the past 24 hours, with nearly $1 billion in liquidations, as investors react to the launch of China's DeepSeek artificial intelligence (AI) model.
BTC fell 4% over the past 24 hours, settling at $100,000. ETH dropped 6% to $3,100, while XRP recorded an 8% decline, trading at $2.88. Solana (SOL) also experienced significant losses, sliding 12% to $226. The total cryptocurrency market capitalization decreased by 7%, reaching $3.55 trillion, according to CoinGecko.
![BTC Price chart](/_next/image?url=https%3A%2F%2Fcdn.sanity.io%2Fimages%2F6oftkxoa%2Fproduction%2F930278f5d3699f22e3b29a0f2969ca7309bcfc88-813x472.jpg&w=1200&q=100)
In the past 24 hours, $939 million in liquidations affected 331,109 traders, according to CoinGlass. BTC accounted for approximately $287 million, while altcoins contributed around $182 million. Ethereum (ETH) added another $133 million to the liquidation tally.
Release of DeepSeek
The market downturn aligns with the launch of DeepSeek, a Chinese AI model touted as a competitor to ChatGPT. Analysts suggest that rising competition in the AI sector is impacting overall investor sentiment in the tech space, spilling over into cryptocurrency markets.
“Markets have reacted aggressively to the news that China has launched a cheaper and reportedly better version of ChatGPT,” said Charles Wayn, co-founder of Galxe. “While TikTok owner ByteDance has also entered the fray with Doubao-1.5-pro, which it claims is superior to its American rival.”
Wayn noted that both are significantly cheaper than ChatGPT. DeepSeek, for example, he said, supposedly charges $2.20 for every million tokens of data, compared to $198 at Open AI.
“While this is bad news for investors in US tech stocks, it’s not bad news for the crypto industry,” Wayn continued. “Yes, we’ve seen a slide in crypto tokens today, but it won’t last as crypto is the biggest beneficiary of AI technology.”
He highlighted the growing synergy between AI and blockchain, citing examples such as AI co-pilots like Alva, which assist investors in researching digital assets, AI tools that help developers advance blockchain technology more efficiently, and AI agents capable of fully managing portfolios. “The possibilities are endless,” he added.
Tech Stocks Bleed
The unveiling of China's DeepSeek AI model also sent ripples through global financial markets, particularly impacting U.S. technology stocks. On Monday, the Nasdaq 100 index fell approximately 3%, with Nvidia's stock plunging 11%. Other tech giants, including Microsoft, Alphabet, and Palantir, also experienced notable declines.
DeepSeek's flagship AI model, R1, claims to offer capabilities comparable to leading U.S. models like OpenAI's ChatGPT but at a fraction of the development cost.
This has raised concerns about the competitive landscape of AI technology, potentially challenging U.S. dominance in the sector. Last week, President Trump signed an executive order emphasizing the need to maintain U.S. leadership in AI innovation.
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