Why is DeepSeek Causing Bitcoin and Crypto Market to Plunge

Hello. The Chinese DeepSeek AI startup has triggered a significant market sell-off, causing Bitcoin and the wider crypto market to plunge.

The leading crypto Bitcoin dropped below $100,000, seeing a sharp decline of around 5% in 24 hours. The total crypto market cap declined by over 5%, falling to $3.59 trillion, marking one of the most remarkable sell-offs since the inauguration of President Donald Trump.

DeepSeek was built on a budget of $6 million and uses significantly fewer GPUs compared to US counterparts.

The AI model has raised concerns about the potential disruption of US tech companies' AI dominance. It is cost efficient and groundbreaking open-source technology and challenging the existing AI landscape.

It has caused the uncertainty spread across Tech stocks (NASDAQ dropped over 3%), crypto markets and broader investment sectors.

The United States dollar index climbed to 107.74, traditionally weighing on Bitcoin.

While some analysts remain cautiously optimistic about a potential market recover, the immediate impact of the emergence of DeepSeek has been a significant market correction across crypto and tech stocks.

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