
KEYTAKEAWAYS
- DeepSeek's cost-efficient AI technology operates without expensive chips, potentially disrupting the traditional semiconductor industry and causing Japanese tech stocks to decline.
- U.S. markets reacted strongly, with Nasdaq futures falling 2%, as investors question the necessity of large AI infrastructure investments.
- Cryptocurrency markets saw substantial losses, with Bitcoin dropping below $98,000 and AI tokens falling 9% during Asian trading.
CONTENT
Recently, Chinese startup DeepSeek made a big breakthrough in AI technology. The company created a new AI model that costs much less to run than usual. Unlike traditional AI that needs expensive, powerful chips, DeepSeek’s technology works well without the most advanced hardware. This could make AI much cheaper to use and change how the whole market works.
Analyst Holger Zschaepitz says DeepSeek’s success might be a big threat to US stocks. He questions if companies still need to spend billions of dollars on hardware when DeepSeek can offer good results for less money. This worry quickly changed how investors feel about both tech stocks and cryptocurrencies.
JAPANESE CHIP STOCKS TAKE A HIT
DeepSeek’s rise affected markets worldwide, especially Japanese chip stocks. SoftBank Group, a big tech investor, saw its stock drop by 8%. Investors worry that new companies like DeepSeek might hurt traditional chip companies’ profits. Two other chip equipment makers, Tokyo Electron and Disco, also saw their stocks fall by more than 3%.
(Source:TradingView)
As AI keeps getting better, analysts think traditional chip companies might sell less because new technology might need less hardware. This has made many people worried about the future of chip companies.
US STOCK FUTURES DROP
US stock futures also felt the impact of DeepSeek’s news. The Nasdaq 100 futures quickly fell 3%. Since tech stocks are a big part of the Nasdaq, their performance affects the whole market. S&P 500 futures also went down, showing that investors are worried about all tech stocks.
(Source:TradingView)
Investors are nervous about new AI companies growing in the market. They worry these companies can make good products for less money, which could hurt bigger, older companies.
CRYPTOCURRENCY MARKETS SEE BIG SWINGS
DeepSeek’s new technology also indirectly shook the cryptocurrency market. On January 27, affected by global financial market panic and negative sentiment, cryptocurrency prices dropped sharply due to the DeepSeek news.
(Source:TradingView)
Major cryptocurrencies also went down. Bitcoin fell below $98,000, dropping 6.72% in one day. AAVE also fell a lot, going down to $289.63, a 12.22% drop in one day. These drops show that investors are worried AI might replace some current tech solutions.
CONCLUSION
The big drop in crypto prices happened more because investors are scared and moving their money around, not because there’s anything wrong with cryptocurrencies themselves. While DeepSeek’s AI technology caused some short-term problems in the crypto market, this mostly shows that investors are worried about changes in tech, not about cryptocurrencies themselves.
As new companies like DeepSeek grow, market worries quickly spread to cryptocurrencies. While new AI technology might change current markets, this doesn’t mean cryptocurrencies will lose their value. Right now, the big market changes are happening more because of how investors feel and where they put their money, not because of the technology itself.
The crypto market is going through big changes because of outside factors, which often happens when investors aren’t sure what will happen next. People got scared and took money out of cryptocurrencies, especially when everyone started talking about new technology. But in the long run, as markets get used to new technology and changes, cryptocurrencies might keep growing because of their special benefits.
Overall, while DeepSeek caused some short-term market problems, this isn’t a basic problem with cryptocurrencies. As investors become more confident again, the market might become more stable and sensible.
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