Bitcoin fell 7% on Monday alongside a general slide among tech stocks including Nvidia, as China’s new artificial intelligence model sent shock waves through Silicon Valley.
The original cryptocurrency dipped from $105,000 on Sunday afternoon to a low of $98,000 on Monday morning after large language model DeepSeek rocketed to No. 1 on Apple’s App Store, topping OpenAI’s ChatGPT.
AI-related cryptocurrencies tumbled as well. NEAR and FET, which combine AI and blockchain technology, are each down 10% in the past 24 hours. Core Scientific, a Bitcoin mining company that hosts AI infrastructure, is down 33%.
Fears that DeepSeek threatens U.S. dominance in the AI sector impacted Bitcoin and other cryptocurrencies because it’s seen as a “risk-on” asset, says JP Richardson, CEO of crypto exchange Exodus. “When there are any shakes or fears in the stock market, typically, you see a correlation in the fall of price in the stock market, and that of cryptocurrency and Bitcoin,” he said.
Since its release last week, DeepSeek has captured the attention of America’s tech elite as a potential major rival to OpenAI, Google, and Meta, which have dominated the space until now. It offers virtually the same capabilities as other popular models, but reportedly runs on less-advanced chips, making it 98% cheaper to use than ChatGPT.
Shares of Nvidia, the tech giant that powers much of the AI industry with its highly sought-after computer chips, plummeted 17% on Monday, as the new model raises questions about whether demand for Nvidia’s chips is overblown.
Despite the panic, Richardson says that “everybody should be looking at this as a gift to create better, cheaper, faster, open, free AI systems.” That’s because DeepSeek is open-source, and anyone can review, edit, and copy its code.
Richardson predicts that the recent market downturn won’t last long because American companies will soon leverage DeepSeek to increase efficiency. In fact, he says that he’s planning to use the technology for his own company to help develop code that powers its products.
“We have an AI bot that takes a look at that code. It reviews every single line, and it will point out all sorts of potential areas that can be improved in the code,” Richardson said. “So with a technology like DeepSeek, it becomes cheaper for us.”
But other tech leaders aren’t as excited. Prominent venture capitalist Marc Andreessen called the development “AI’s Sputnik moment,” in an X post on Sunday, suggesting that the U.S. is falling behind.
