DeepSeek AI Drops the Reset Bomb on NVIDIA and Crypto Market

- Bitcoin price re-enters $103,000, stabilizing after volatility triggered by DeepSeek announcement - DeepSeek announcement wipes $600 billion off NVIDIA's market cap [Unblock Media] Bitcoin's price recently surged past $103,000, reigniting interest in the cryptocurrency market. Many analysts attribute this upward trend to the announcement of DeepSick's AI technology. However, other macroeconomic factors such as the possibility of the U.S. Federal Reserve freezing interest rates and expectations of global economic recovery also appear to be playing significant roles. According to CoinGecko data, Bitcoin temporarily exceeded $103,000, about 6% lower than its January 20th peak of $109,000. Dominic John, an analyst at Chronos Research, commented, "Investors are optimistic about the long-term impact of AI democratization on the market. Consequently, they are moving funds into Bitcoin, their preferred cryptocurrency asset." However, it is hard to conclude that DeepSick's announcement is the sole reason for Bitcoin's price increase. The overall cryptocurrency market's growing preference for risk assets, fueled by the possibility of the Federal Reserve freezing interest rates and global economic recovery expectations, is also considered a major factor in the price uptick. Meanwhile, the prominent meme coin Dogecoin experienced a significant drop on Monday but has since rebounded by approximately 2.6% to $0.33. Other major cryptocurrencies such as Binance Coin and Ripple have also shown market recovery, with increases of 3.6% and 3.2%, respectively. This improvement aligns with the gradual stabilization of the market following the initial panic triggered by DeepSick's breakthrough announcement. The announcement initially led to the liquidation of cryptocurrency positions worth $860 million and increased volatility in U.S. tech stocks. However, analysts at Wall Street concluded that the market's initial reaction was overly exaggerated. DeepSick's latest model, Janus Pro 7B, an open-source AI image generation model with a focus on multimodal capabilities, has garnered investor interest due to its efficient training process. Bernstein's semiconductor analyst Stacy Rasgon cautioned against excessive expectations, stating, "DeepSick did not build OpenAI for $5 million." Similarly, Morgan Stanley analysts noted that while DeepSick proposed an alternative path for AI model training, it was more noteworthy for its economic training method than for fundamentally threatening existing major players. Nevertheless, DeepSick's announcement had a psychological impact on tech stocks, especially the AI hardware market. Nvidia lost $600 billion in market capitalization on Monday due to the surge in DeepSick's popularity, leading to a total loss of about $1 trillion across the U.S. tech sector in just one day. Investors speculated that DeepSick's acquisition of efficient AI model training technology could reduce GPU dependency, thus lowering Nvidia's growth forecast. Despite Nvidia's spokesperson stating that the DeepSick case demonstrated the ability to build widely accessible models and computing environments while fully complying with export controls, the market impact was deemed insufficient to mitigate the shock. In this scenario, former President Donald Trump hinted at the potential easing of trade tensions with China. He mentioned in the Roosevelt Room at the White House that he was considering a 10% tariff on China, significantly lower than the 60% tariff rate he had mentioned during his campaign. Market analysts interpreted this easing of trade tensions as a positive factor for global supply chain stability, positively impacting investment sentiment in the tech sector and cryptocurrencies. Trump also remarked on the influence of Chinese companies like DeepSick releasing AI technologies, suggesting that "Chinese AI, with its economic efficiency and groundbreaking open-source technologies, could challenge U.S. dominance in artificial intelligence." He added, "There is a positive side to the fact that more can be done with less money," conveying the message that necessary investments should be made efficiently to stay competitive. QCP Capital analysts evaluated that "large-scale language models developed independently by China could threaten the competitiveness of U.S. companies," but also emphasized that the situation could change if the U.S. focuses on AI development. Ultimately, the ripple effect of DeepSick's AI technology announcement has caused short-term volatility in the cryptocurrency market and tech stocks but appears to be stabilizing as major cryptocurrencies like Bitcoin recover and market participants reassess. Whether the flow of funds shifts from traditional assets to new ones will largely depend on the Federal Reserve's interest rate decisions, global trade policies, and subsequent AI innovation announcements.