"DeepSeek's Launch Shocks Crypto Market: $534M Outflows, Bitcoin & Ethereum Volatility, XRP Inflows"

The recent launch of DeepSeek has sent shockwaves through the cryptocurrency market, triggering a significant outflow of capital and sparking volatility in Bitcoin and Ethereum, while XRP experienced inflows. This unexpected market turmoil comes as investors grapple with the implications of new fintech innovations in the crypto sector.

According to CoinShares' Head of Research, James Butterfill, the launch of DeepSeek caused investors to panic, leading to outflows from Bitcoin and Ethereum totaling US$442 million and US$99 million, respectively. The total outflows amounted to $534 million, highlighting the profound impact of DeepSeek's launch on the crypto market.

The launch of DeepSeek has not only disturbed the crypto ecosystem but also significantly impacted investment vehicles like Bitcoin [BTC] and Ethereum [ETH] ETFs. Following DeepSeek's debut, these ETFs were hit with alarming outflows amid heightened investor anxiety. Data from Farside Investors shows that spot BTC ETFs experienced a staggering $457.6 million in outflows, while spot ETH ETFs saw losses amounting to $136.2 million. Such sharp reversals highlight the fragility of investor sentiment in the face of new market entrants, particularly when high-profile launches stir fears of instability.

The turbulence following DeepSeek's announcement showcases the market dynamics at play within the cryptocurrency arena. During the initial euphoria over these potentially lucrative ETFs, the market had garnered approximately $1.9 billion in inflows, particularly during a positively viewed period in 2024. However, the sudden influx of negative news has disrupted the momentum established over recent weeks, leaving many investors scrambling to reassess their positions.

While a massive $534 million in capital fled the crypto market in response to DeepSeek, Ripple's XRP showcased remarkable resilience. Despite the turbulence, XRP reported a surprising inflow of $2.1 million in ETP transactions. This positive response indicates that some investors perceive XRP as a safe haven amid a sea of uncertainty. High-net-worth wallets took the opportunity to accumulate, acquiring a substantial 120 million XRP during the bearish phase, which may point towards strategic long-term positioning.

The second consecutive day of losses faced by crypto mining stocks such as Riot Platforms (RI