The cryptocurrency market is in turmoil as fears of a second dot-com bubble resurface, due to the rise of DeepSeek, a Chinese AI solution challenging OpenAI's dominance. Although there is no regulatory crackdown or government BTC sell-off, cryptocurrency is facing a significant blow. Here is what experts are saying about this market shift.
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DeepSeek Shockwave
A few weeks ago, OpenAI revealed that even with a $200 subscription model, high operational costs—including billion-dollar chip investments and enormous energy costs—were eating into the company's profits. This revelation coincided with the exponential rise of NVIDIA's stock price, driven by the booming AI industry.
Next is DeepSeek—a Chinese AI product reportedly developed in just two months at a cost of $6-7 million. Claiming to outperform ChatGPT, DeepSeek has raised skepticism about inflated valuations in the AI space, leading to a market-wide sell-off.
Daan Crypto Trades summarized the implications:
"NVDA lost more than $600 billion in market capitalization in just two trading days. This figure is equivalent to the total market cap of ETH and XRP combined, or nearly 33% of BTC's market cap, lost within 48 hours."
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Analyst's perspective
While the market is chaotic, some analysts remain optimistic. Michaël van de Poppe notes that the rise of DeepSeek could be part of a broader geopolitical strategy. He points out that maintaining such an AI platform, especially with its image processing capabilities, would require significant server costs.
"The current price of DeepSeek, which is 30 times cheaper than OpenAI, suggests that this company is operating at a loss. Many believe this is subsidized by the Chinese government as part of a technology war with the United States. And as $1 trillion has been wiped out from the U.S. stock market, it seems this company is operating efficiently."
Poppe also emphasizes the resilience of altcoins, noting signs of a bottoming out of projects like SEI Coin.
"SEI has reached a new low in the cycle compared to BTC. This is not the end of the bull market—but rather closer to the end of the bear market."
Implications for cryptocurrency investors
As the disruption of DeepSeek continues, the cryptocurrency market as a whole remains volatile. Analysts from Digital Currency Blog suggest that although a short-term decline is likely, long-term opportunities may arise as institutional interests are recalibrated.
Investors should monitor macro trends and geopolitical shifts while focusing on risk management. This developing story could shape the future of both the cryptocurrency and AI industries.