Bitcoin Plunges as DeepSeek AI Threatens Big Tech Earnings

Bitcoin Price Dips Below $98,000 Amid Concerns Over DeepSeek AI’s Impact on Big Tech Earnings

The price of Bitcoin dipped below $98,000 on Monday, January 27, 2025, as concerns over the potential impact of DeepSeek AI on big tech earnings weighed on investor sentiment. The Chinese artificial intelligence startup introduced an open-source AI model called DeepSeek R1, which researchers claim can outmatch OpenAI’s most advanced reasoning systems at a fraction of the cost.

Using a novel learning method, running queries with DeepSeek R1 is 98% cheaper than OpenAI’s flagship model, and it also purportedly cost much less to train than OpenAI’s GPT models and other rivals. This development could put mountains of cash spent on AI development by tech giants under scrutiny, with Microsoft, Meta, and Tesla set to report earnings on Wednesday.

The tech-heavy Nasdaq, which had been riding a wave of AI hype to all-time highs last year, plunged 3.5% when U.S. markets opened on Monday. Bitcoin’s price had fallen to $99,600 as of this writing, showing a 5% decrease over the past day. Crypto liquidations had topped $966 million over the past day, according to data from CoinGlass.

The recent emergence of DeepSeek has sent shockwaves through the cryptocurrency and AI industries. Its unexpected success with minimal resources starkly contrasts the capital-intensive strategies of top US firms, raising questions about future investment dynamics. Experts suggest that this could potentially shift how AI development is approached, with a strong warning about the inflated costs tied to current AI capital expenditures.

DeepSeek’s launch has significantly impacted Nvidia and other related mining stocks. Following its entry last week, Nvidia — which previously projected substantial growth in AI — has faced a sharp decline. Analysts had noted that Nvidia’s AI hardware was deemed essential to the industry’s growth, but DeepSeek’s effective use of limited resources challenges this notion.

Despite Nvidia’s record revenues and future projections that touted AI as a multi-trillion-dollar frontier, DeepSeek’s arrival has unveiled vulnerabilities in the existing AI landscape. Following the report of DeepSeek’s performance, stocks of major mining companies, such as Marathon Digital Holdings and Riot Blockchain