Here’s why DeepSeek crashed your Bitcoin and crypto

Here’s why DeepSeek crashed your Bitcoin and crypto

DeepSeek may have “nothing to do” with crypto, but its sudden entrance on the scene affected crypto prices.

The Bitcoin price dropped 6% on Jan. 27 when stock markets responded to the debut of China’s open-source, highly efficient AI model that investor Marc Andreessen dubbed “AI’s Sputnik moment.”

DeepSeek spooked US markets on news that the model’s developers were able to produce a worthy competitor to American AI firms like OpenAI at a fraction of the cost. The firm claims it was able to develop its AI model on a shoestring budget of just under $6 million using less advanced hardware from semiconductor manufacturer Nvidia. 

Tech stocks took a beating. All of the “Magnificent Seven” — Apple, Nvidia, Tesla, Microsoft, Amazon, Meta and Alphabet (Google) — saw losses, with Nvidia breaking a Wall Street record and dropping nearly 17% on the day.