DeepSeek AI’s release hit crypto markets hard, pulling down tokens across the board. Is this a temporary dip or the beginning of a major market reset?
Crypto sinks deeper with DeepSeek AI
As of Jan. 27, the total crypto market cap has slipped by over 5% in the last 24 hours, sinking to $3.59 trillion as per CoinGecko. This marks one of the sharpest sell-offs since Trump’s inauguration on Jan. 20.
Bitcoin (BTC), the flagship crypto, hasn’t been spared either, dipping around 5% in the last 24 hours to trade at $99,800 levels as of this writing.
Meanwhile, Ethereum (ETH) has tumbled even further, losing 7.5% of its value to hover around $3,100. Altcoins have fared even worse, with losses ranging from 10% to 20%.
The timing couldn’t be more curious. On Jan. 23, Trump signed several executive orders that many hailed as a landmark move for crypto adoption in the U.S.
These orders came just two days after Acting SEC Chair Mark Uyeda launched a dedicated crypto task force to tackle regulatory ambiguity. Yet, instead of soaring on this optimism, the crypto market appears to have buckled under an invisible weight.
What’s causing this dissonance? Could the sell-off be tied to deeper investor anxieties, or is it merely a case of “buy the rumour, sell the news”?
Let’s delve into the potential triggers behind this market-wide slump, unpack the details of Trump’s orders, and consider what the future might hold for digital assets in this new political era.
Decoding the recent decline
While the executive orders seemed like a bullish catalyst, other factors have emerged to overshadow the optimism, triggering a broad sell-off across the market.
The immediate trigger for this decline appears to be the release of DeepSeek R1, an innovative AI model unveiled by China’s DeepSeek lab.
This open-source large-language model has been described as a major milestone for artificial intelligence, with Marc Andreessen calling it “AI’s Sputnik moment.”
What makes DeepSeek R1 stand out is its efficiency—it matches or surpasses the performance of leading models like those from OpenAI, but it was built on a modest $6 million budget and uses significantly fewer GPUs.
While this breakthrough is a huge leap for AI, it has rattled the market for AI-related crypto assets as investors reassess the value of tokens tied to GPU-intensive operations.
Render (RNDR), Near Protocol (NEAR), The Graph (GRT), and Artificial Superintelligence Alliance (FET) are among the hardest hit, with losses ranging from 7% to 9%.
Node.AI (GPU), which is heavily reliant on GPU-based operations, has seen a staggering 20% drop. Altogether, the total market cap of AI-focused cryptocurrencies has shrunk by 8%, now sitting at $38 billion.
This sell-off created a ripple…
Read More: DeepSeek AI Sparks Crypto Crash, Bitcoin Tumbles Hard
