- DeepSeek’s $6M AI outperformed $100M models, disrupting markets.
- AI coins are volatile, but innovation may drive growth.
This shockwave hit the AI industry as a Chinese startup named DeepSeek introduced epoch-making AI models at a fraction of the price at which U.S. tech giants do. The ripples of this innovation trickled down in the market and dented the AI coin market cap, sending it to below $44 billion with a plunge of 7.66%. Tokens such as Near Protocol (NEAR), Internet Computer (ICP), and Render (RENDER) faced a significant drop in value.
DeepSeek’s rise, despite the market turmoil, is a revolutionary way of building AI. At a cost of only $6 million, where competitors like OpenAI need to spend $100 million, DeepSeek is raising the bar on efficiency and affordability. Its app topping the Apple Store rankings also adds to its visibility.
DeepSeek AI Launch Sparks Market Panic
The cryptocurrency market had its first major flash crash of 2025 on Monday, as Bitcoin (BTC) and the major altcoins suffered double-digit losses. The total market capitalization fell from $3.61T to $3.34T in a single day. But now it has recovered to 3.52T, leading altcoins to gain back their yesterday’s loss.
However, the crash removed $850 million in leveraged positions and reduced $269 billion from the total capitalization of the market, engendering widespread fright among traders and investors.
Following DeepSeek’s public declaration, severe declines hit the United States stock market, already bruised by investor jitteriness over-inflated valuations for technology stocks. On January 26th, the US stock market saw a $787 billion loss, with Nvidia’s market value plummeting by nearly $1.5 trillion. The market sell-off was amplified by institutional investors’ entry into crypto markets.
AI-related cryptocurrencies suffered the most significant losses, with tokens tied to artificial intelligence projects dropping as much as 70%. Meme tokens were also not spared, Dogecoin (DOGE) fell more than 15%, PEPE shed 30%, and Trump’s newly launched memecoin lost more than 20%.
According to Coinglass, over 169,863 traders were liquidated, totaling losses of $463.88 million in the last 24 hours, where Bitcoin and Ethereum topped the losses with BTC dropping 10% to a multi-week low at $97,785 and ETH to $3,024, from which the majority of liquidations came from the long traders at a loss of $790 million.
However, DeepSeek has gained recognition in global AI benchmarks like AIME, MATH-500, and GPQA, narrowing the performance gap with industry leaders such as OpenAI’s ChatGPT. The startup’s rapid ascent has prompted tech companies like Meta to form emergency teams to counter its cost-efficient models.
Prices can be as much as 27 times less than their competitors. So unless its competitors can quickly do something about this, DeepSeek will rule. This rise is rewriting competition in the race to take the lead globally on AI in an increasingly efficiency-and-value-oriented market.
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Disclaimer: The opinion expressed in this article is solely the author’s. It does not represent any investment advice. TheNewsCrypto team encourages all to do their own research before investing.
