"DeepSeek's $5.5M AI Model Shocks Nvidia and Crypto Markets"

DeepSeek AI's Breakthrough Shocks Nvidia and Crypto Miner Stocks

DeepSeek AI, a startup based in Hangzhou, China, has sent shockwaves through the tech and crypto markets with the release of its open-source large language model (LLM) app. The model, DeepSeek R1, was developed and trained for a mere $5.58 million, a fraction of the cost of ChatGPT, which is estimated to have cost over $100 million to develop.

OpenAI, the company behind ChatGPT, is valued at $157 billion and has recently pledged to raise $500 billion for AI infrastructure in the United States. However, the cost-efficiency of DeepSeek R1 has raised concerns about the profitability of its rivals, particularly those that have already invested heavily in more expensive AI infrastructure.

US tech billionaire and general partner of Andreessen Horowitz, Marc Andreessen, described the release of DeepSeek R1 as China's "Sputnik Moment," referring to the Soviet Union beating the United States to space with the first artificial Earth satellite.

The impact of DeepSeek's breakthrough has been felt across the tech and crypto markets. AI chipmaker Nvidia (NVDA), a member of the "Magnificent 7," has plummeted on Monday, losing over $400 billion from its market cap and falling 22% from its January high. The S&P 500 and Nasdaq indices are also down 1.75% and 3.19% respectively on the day.

Crypto assets have followed a similar path, with over $975 million in liquidations in just 24 hours, mostly traders attempting to long Bitcoin (BTC), Ethereum (ETH), and altcoins with leverage. BTC is trading at $99,789 at the time of writing, and virtually all other digital assets are in the red on the day.

The release of DeepSeek R1 has also triggered a broad sell-off across the crypto market, with the total cryptomarket cap slipping by over 5% in the last 24 hours to $3.59 trillion. Bitcoin (BTC), the flagship crypto, has dipped around 5% in the last 24 hours to trade at $99,800 levels.