By Guest 
In a surprising turn of events, the release of the open-source AI model DeepSeek by Chinese companies has sent ripples across the global tech and financial sectors.
This new AI model not only challenges previous notions of AI capabilities but also has some analysts speculating about its impact on the cryptocurrency market downturn.
Will DeepSeek AI Contribute to Bitcoin’s Fall Below $100000?
According to Coin Telegraph and venture capitalist Nick Carter, the launch of DeepSeek has shattered the perception that China can only produce limited AI models. This development has significantly diminished the competitive edge that Silicon Valley and the United States have held over their global counterparts in the AI race.
Carter further emphasized that DeepSeek demonstrates that OpenAI does not possess an unassailable advantage. Consequently, assumptions about the scalability, value capture in AI models, and development costs have been challenged by this breakthrough.
The rapid development of DeepSeek in China contradicts earlier reports claiming that the country was six months behind the United States in AI development. This has intensified the competition within the AI industry.
Despite U.S. export controls on AI chips to China, implemented in October 2022, Chinese companies have either turned to domestic production or utilized cloud computing platforms like Amazon Cloud Services to circumvent these restrictions and gain access to advanced chips.
In August 2023, China also eased its AI development regulations to encourage innovation. For instance, the country lifted financial penalties for companies that had previously violated industrial regulations.
DeepSeek’s Impact on the Crypto Market
To understand DeepSeek’s significance, it’s important to note that the value of ChatGPT has soared to $150 billion. However, estimates suggest that the design and production costs of DeepSeek were less than $10 million. Despite this, user reports on social media indicate that DeepSeek’s performance surpasses ChatGPT, and the protocol utilizes more up-to-date data.
This has raised a crucial question: Are the current valuations of AI projects exceeding their actual worth? The U.S. futures market on the NASDAQ has confirmed the bearish sentiment among traders, and it appears that there will be significant selling pressure on companies like NVIDIA when the U.S. market opens later today.
The correlation between Bitcoin and the broader crypto market with the stock market and U.S. news has increased in recent times. As previously reported, news of Trump’s executive order did not boost Bitcoin demand because it did not signal the launch of strategic BTC reserves. It seems that this lack of demand has been exacerbated by the news about DeepSeek and has finally manifested.
Additionally, political tensions between the U.S. and Colombia appear to have influenced the bearish sentiment in the U.S. stock market. This week, major earnings reports from companies like Tesla and NVIDIA are expected, which could further impact the market.
Global AI Competition Intensifies
U.S. President Donald Trump has pledged to make the United States the global AI capital. In his speech at the World Economic Forum in Davos, he announced that deregulation in the energy sector would bolster America’s ambitions to dominate the AI industry. Last week, Trump unveiled an initiative called “Stargate,” worth $500 billion, which includes $500 billion in investments from OpenAI, technology firm Oracle, and SoftBank.
The goal of this project is to build AI data centers and advanced computing facilities in the United States, and according to Trump, it will create 100,000 jobs. UK Prime Minister Keir Starmer also announced similar plans in January to develop AI infrastructure in the UK. The aim is to accelerate the development of data centers to compete on a global scale.
In summary, the release of DeepSeek has not only disrupted the AI landscape but also has potential implications for the financial markets, including the cryptocurrency sector. As global competition in AI intensifies, the ripple effects of such technological advancements are likely to be felt across various industries.