the artificial intelligence model DeepSeek sent shockwaves through the global market. This model boasts extremely low costs but performs on par with AI products from American companies like OpenAI.

DeepSeek Shocks Tech Stocks, Bitcoin, and the Broader Cryptocurrency Market

The ripple effects were immediate, with American tech stocks taking a heavy hit. The "Big Seven" — Apple, NVIDIA, Tesla, Microsoft, Amazon, Meta, and Alphabet (Google) — all saw declines, with NVIDIA's share price plummeting by nearly 17% at one point. The cryptocurrency market was not spared either, with Bitcoin and Ethereum falling by 6% and 7% respectively, and some altcoins losing double-digit percentages. This seems to reaffirm that cryptocurrencies are indeed risky assets and are influenced by market forces similar to traditional finance.

Marc Andreessen, the founder of a16z, described DeepSeek as the "Sputnik Moment" in AI, primarily because DeepSeek surprised the global market. After all, the mainstream narrative in the field of artificial intelligence has always been to view the United States as the industry leader. (Note: The Sputnik Moment refers to a time when people realize they are under threat and challenge and must redouble their efforts to catch up.)

Jean Rausis, the founder of the decentralized exchange SMARDEX, noted that although it seemed to have "nothing to do with" DeepSeek, the share prices of cryptocurrencies and crypto-related companies like MicroStrategy fell. In the broader market sentiment, cryptocurrencies may have been just one of the casualties. JP Richardson, CEO of Exodus, explained that cryptocurrencies are a type of "risk-preference" asset. When there are any fluctuations or panic in the stock market, such as the emergence of unexpected AI models, we will see declines. Furthermore, the stock market is correlated with cryptocurrencies and Bitcoin, triggering synchronized price declines.

A Shallow Analysis of How DeepSeek Impacts the Cryptocurrency Market

An analyst from the cryptocurrency market maker Wintermute believes that although cryptocurrencies lack a short-term narrative, their correlation with the stock market is driving capital flows, and de-risking has been flagged.

In other words, if cryptocurrency investors are frightened by the stock market, they will also choose to sell.

As digital assets become more widely adopted and accepted in traditional financial markets, the correlation between Bitcoin and stock prices has been under scrutiny. BitMEX pointed out in its investor report that the correlation between cryptocurrencies and stocks is likely to persist for a considerable period. Dow Jones market data showed that the six-month rolling correlation between Bitcoin and the NASDAQ Composite Index hit 0.5 this Monday, the highest level since March 2, 2023.

Fortunately, the recovery of cryptocurrencies was relatively swift, with Bitcoin rebounding above $100,000 by the end of the week.

A Shallow Analysis of How DeepSeek Impacts the Cryptocurrency Market

Andre Dragosch, head of European research at the asset management firm Bitwise, noted that while the NASDAQ index continued to decline, Bitcoin stabilized, which is extremely optimistic. Even for broader market fluctuations, many people remain optimistic and believe that cheaper AI models like DeepSeek will bring long-term benefits.

DeepSeek has lowered the cost of artificial intelligence, which in the long run will have a limited impact on Bitcoin prices. Technical experts and market observers quickly noticed that DeepSeek is open-source, meaning other AI developers can adopt some of DeepSeek's advantages to build and improve their models. Geoff Kendrick, an analyst at Standard Chartered Bank, analyzed: "The positioning of the AI market will become clearer. Regardless, if lower-cost AI tools (marginally) reduce inflation, then risk assets unrelated to AI, such as Bitcoin, should benefit."

As risks temporarily subside, Bitcoin's momentum appears to be strengthening again. Geoff Kendrick predicts that Bitcoin may reach its next historical high in just a few days and could exceed its record of around 109,000nextweek,potentiallyreachingashighas130,000 between February and March.

Paul Howard, an executive at liquidity provider Wincet, further analyzed: "DeepSeek will accelerate AI development in the United States and abroad, denying AI hegemony, and having minimal potential impact on cryptocurrencies. The functionality provided by DeepSeek is rarely unavailable from other LLM trading models, and its lower costs have minimal impact on the way institutional participants interact with the cryptocurrency market, as the cryptocurrency market amplifies risks compared to the stock market."

On the other hand, there have been some positive developments for Bitcoin and the broader cryptocurrency market at the macro level recently.

According to the Financial Times, if the plan proposed by Czech National Bank Governor Aleš Michl is approved, the Czech National Bank may eventually convert 5% of its 140 billion euros in foreign exchange reserves into Bitcoin. Geoff Kendrick calculated: "At current prices, the Czech National Bank would hold 69,000 Bitcoins. The country currently known to hold the most Bitcoins is El Salvador, with 6,049 Bitcoins." Additionally, the Swiss National Bank appears to be moving towards embracing Bitcoin. The Swiss federal government has officially begun reviewing a referendum proposal called "For a Financially Strong and Responsible Switzerland (Bitcoin Initiative)," which has been published in the Federal Gazette and entered the signature collection phase. The proposal aims to amend the constitution to incorporate Bitcoin into Switzerland's national financial system. Although it may take some time, this initiative is significant as Switzerland's foreign exchange reserves are six times that of the Czech Republic.

The cryptocurrency community predicts that the establishment of a Bitcoin reserve by the United States will prompt other countries to establish their own Bitcoin reserves, significantly pushing up Bitcoin prices. Although Donald Trump has not yet taken action, his directive does create room for establishing such a "reserve," meaning the United States could retain the 207,000 Bitcoins it already holds. Meanwhile, the U.S. Securities and Exchange Commission's rescission of Staff Accounting Bulletin 121 (SAB 121) will also boost institutional demand for digital assets.

Overall, as a powerful AI model, DeepSeek's development and application will more or less have some impact on traditional finance and the cryptocurrency market. After all, it recently triggered a "brief collapse" in the Bitcoin and cryptocurrency markets. However, in the long run, it seems unlikely to have a significant impact on prices. Therefore, it is advisable to view DeepSeek as an AI gift that creates better, cheaper, faster, open, and free options.

the artificial intelligence model DeepSeek sent shockwaves through the global market. This model boasts extremely low costs but performs on par with AI products from American companies like OpenAI.

DeepSeek Shocks Tech Stocks, Bitcoin, and the Broader Cryptocurrency Market

The ripple effects were immediate, with American tech stocks taking a heavy hit. The "Big Seven" — Apple, NVIDIA, Tesla, Microsoft, Amazon, Meta, and Alphabet (Google) — all saw declines, with NVIDIA's share price plummeting by nearly 17% at one point. The cryptocurrency market was not spared either, with Bitcoin and Ethereum falling by 6% and 7% respectively, and some altcoins losing double-digit percentages. This seems to reaffirm that cryptocurrencies are indeed risky assets and are influenced by market forces similar to traditional finance.

Marc Andreessen, the founder of a16z, described DeepSeek as the "Sputnik Moment" in AI, primarily because DeepSeek surprised the global market. After all, the mainstream narrative in the field of artificial intelligence has always been to view the United States as the industry leader. (Note: The Sputnik Moment refers to a time when people realize they are under threat and challenge and must redouble their efforts to catch up.)

Jean Rausis, the founder of the decentralized exchange SMARDEX, noted that although it seemed to have "nothing to do with" DeepSeek, the share prices of cryptocurrencies and crypto-related companies like MicroStrategy fell. In the broader market sentiment, cryptocurrencies may have been just one of the casualties. JP Richardson, CEO of Exodus, explained that cryptocurrencies are a type of "risk-preference" asset. When there are any fluctuations or panic in the stock market, such as the emergence of unexpected AI models, we will see declines. Furthermore, the stock market is correlated with cryptocurrencies and Bitcoin, triggering synchronized price declines.

A Shallow Analysis of How DeepSeek Impacts the Cryptocurrency Market

An analyst from the cryptocurrency market maker Wintermute believes that although cryptocurrencies lack a short-term narrative, their correlation with the stock market is driving capital flows, and de-risking has been flagged.

In other words, if cryptocurrency investors are frightened by the stock market, they will also choose to sell.

As digital assets become more widely adopted and accepted in traditional financial markets, the correlation between Bitcoin and stock prices has been under scrutiny. BitMEX pointed out in its investor report that the correlation between cryptocurrencies and stocks is likely to persist for a considerable period. Dow Jones market data showed that the six-month rolling correlation between Bitcoin and the NASDAQ Composite Index hit 0.5 this Monday, the highest level since March 2, 2023.

Fortunately, the recovery of cryptocurrencies was relatively swift, with Bitcoin rebounding above $100,000 by the end of the week.

A Shallow Analysis of How DeepSeek Impacts the Cryptocurrency Market

Andre Dragosch, head of European research at the asset management firm Bitwise, noted that while the NASDAQ index continued to decline, Bitcoin stabilized, which is extremely optimistic. Even for broader market fluctuations, many people remain optimistic and believe that cheaper AI models like DeepSeek will bring long-term benefits.

DeepSeek has lowered the cost of artificial intelligence, which in the long run will have a limited impact on Bitcoin prices. Technical experts and market observers quickly noticed that DeepSeek is open-source, meaning other AI developers can adopt some of DeepSeek's advantages to build and improve their models. Geoff Kendrick, an analyst at Standard Chartered Bank, analyzed: "The positioning of the AI market will become clearer. Regardless, if lower-cost AI tools (marginally) reduce inflation, then risk assets unrelated to AI, such as Bitcoin, should benefit."

As risks temporarily subside, Bitcoin's momentum appears to be strengthening again. Geoff Kendrick predicts that Bitcoin may reach its next historical high in just a few days and could exceed its record of around 109,000nextweek,potentiallyreachingashighas130,000 between February and March.

Paul Howard, an executive at liquidity provider Wincet, further analyzed: "DeepSeek will accelerate AI development in the United States and abroad, denying AI hegemony, and having minimal potential impact on cryptocurrencies. The functionality provided by DeepSeek is rarely unavailable from other LLM trading models, and its lower costs have minimal impact on the way institutional participants interact with the cryptocurrency market, as the cryptocurrency market amplifies risks compared to the stock market."

On the other hand, there have been some positive developments for Bitcoin and the broader cryptocurrency market at the macro level recently.

According to the Financial Times, if the plan proposed by Czech National Bank Governor Aleš Michl is approved, the Czech National Bank may eventually convert 5% of its 140 billion euros in foreign exchange reserves into Bitcoin. Geoff Kendrick calculated: "At current prices, the Czech National Bank would hold 69,000 Bitcoins. The country currently known to hold the most Bitcoins is El Salvador, with 6,049 Bitcoins." Additionally, the Swiss National Bank appears to be moving towards embracing Bitcoin. The Swiss federal government has officially begun reviewing a referendum proposal called "For a Financially Strong and Responsible Switzerland (Bitcoin Initiative)," which has been published in the Federal Gazette and entered the signature collection phase. The proposal aims to amend the constitution to incorporate Bitcoin into Switzerland's national financial system. Although it may take some time, this initiative is significant as Switzerland's foreign exchange reserves are six times that of the Czech Republic.

The cryptocurrency community predicts that the establishment of a Bitcoin reserve by the United States will prompt other countries to establish their own Bitcoin reserves, significantly pushing up Bitcoin prices. Although Donald Trump has not yet taken action, his directive does create room for establishing such a "reserve," meaning the United States could retain the 207,000 Bitcoins it already holds. Meanwhile, the U.S. Securities and Exchange Commission's rescission of Staff Accounting Bulletin 121 (SAB 121) will also boost institutional demand for digital assets.

Overall, as a powerful AI model, DeepSeek's development and application will more or less have some impact on traditional finance and the cryptocurrency market. After all, it recently triggered a "brief collapse" in the Bitcoin and cryptocurrency markets. However, in the long run, it seems unlikely to have a significant impact on prices. Therefore, it is advisable to view DeepSeek as an AI gift that creates better, cheaper, faster, open, and free options.