"AI Agent Coins Surge as DeepSeek's Star Fades"

AI Agent Coins Rebound as DeepSeek Faces Major Setbacks

AI Agent Coins, which had suffered a significant loss earlier this week, have begun to recover as investors redirect their focus towards decentralized AI projects. Virtuals Protocol surged over 8%, while AIXBT and Ai16z both gained over 10%.

This rebound comes after DeepSeek's initial rise had diverted attention from AI-focused cryptocurrencies, leading to a sharp decline in their valuations. At the beginning of this week, DeepSeek unveiled its AI assistant, which rivals existing models but operates at a fraction of the cost. This innovation led to a substantial selloff in US technology stocks, with companies like Nvidia losing $589 billion from its market capitalization. Consequently, the stock price of crypto mining companies and AI-based cryptocurrencies dropped sharply.

However, as the hype cools down, the market is starting to see the potential downsides of this new AI model. Several fake DeepSeek meme coins have surfaced on decentralized exchanges, although DeepSeek has clarified it doesn’t associate with any cryptocurrency. Scammers are still exploiting the hype.

DeepSeek Faces Mounting Pressure

Several challenges for DeepSeek emerged today, shifting market sentiment and fueling gains in AI-related tokens. On Wednesday, Alibaba unveiled Qwen 2.5, an AI model it claims outperforms DeepSeek-V3. This announcement shook investor confidence in DeepSeek’s sustainability in the AI sector.

OpenAI accused DeepSeek of using “distillation” techniques to train its AI models on OpenAI’s outputs. This is a potential breach of OpenAI’s terms of service. Italy’s data protection authority initiated an investigation into its use of personal data, and as a result, DeepSeek’s app has been blocked from Apple and Google stores in Italy.

Mo Magoda wrote on X (formerly Twitter), “DeepSeek is not that special, the only thing that makes it better is that you can use it for free. China knew that USA won’t compete with free and cheaper products. USA, instead of competing, they want to ban the app in USA. The only solution for USA is banning the competition.”

AI Agent Coins See Market Rebound

Following these developments, AI Agent coins, which had faced