Bitcoin mining stocks dive 30% as China’s DeepSeek AI disrupts market
- DeepSeek’s launch disrupts crypto markets, triggering volatility and sharp declines in mining stocks.
- Federal Reserve’s rate decision and tech earnings are crucial for market recovery and momentum.
The launch of DeepSeek, a Chinese, open-source LLM, has sent ripples through the cryptocurrency market, triggering a notable downturn in certain crypto mining stocks.
This also led to a sharp sell-off in the crypto market but, the latest data from CoinMarketCap shows signs of recovery, with the market cap climbing to $3.51 trillion, a 4.63% increase within a day.
Bitcoin [BTC] mirrored this rebound, trading at $102,800.76 following a 3.82% rise in 24 hours.
The role of DeepSeek in market collapse
Despite BTC’s bullish pullback, though, the unveiling of DeepSeek has cast doubts on the perceived value of crypto mining firms as data-processing centers.
The market turbulence also led to massive liquidations, with over $861 million wiped out across 316,282 traders, highlighting the volatility sparked by this disruptive AI innovation.
Ash Crypto, a seasoned expert in the industry, highlighted that the heightened volatility is more reflective of “broader market reactions” tied to DeepSeek’s growing influence rather than isolated factors within the crypto sector.
He said,
“This has nothing to do with the crypto market and everything to do with the US stock market,”
Echoing this sentiment, Ran Neuner, founder of Crypto Banter, cautioned about the far-reaching consequences of DeepSeek’s emergence and noted,
“If these stocks take a hit, people will lose fortunes, and this could crash all risk markets as people scramble out of risk.”
The analysis of the broader market
That being said, the broader market turbulence saw the CoinDesk 20 Index tumble by 5.6%, driven by steep losses in AI-focused tokens like Render [RNDR] and Filecoin [FIL], while Solana [SOL], a key platform for crypto AI agent tokens, dropped over 10%.
Things were worse in the traditional markets where stocks most affected by DeepSeek’s emergence such as Nvidia plunging 17%, and the Nasdaq falling 3%, wiping out $465 billion in market value in a single day.
Meanwhile, in the crypto world, Bitcoin mining stocks that had big AI plans for the near future faced severe losses.
Additionally, companies like Core Scientific (CORZ), TeraWulf (WULF), Bitdeer (BTDR), Cipher Mining (CIPH), and Applied Digital Corporation (APLD) saw their stocks nosedive by 25% to 30% in a single day.
The ripple effects extended to the AI-focused coins as well, with data from CoinGecko revealing a sharp 13% drop in market capitalization, reducing it to $36.4 billion, highlighting the widespread impact of DeepSeek’s emergence.
How will the Fed save Bitcoin mining stocks?
Thus, as markets brace for the Federal Reserve’s upcoming decision on interest rates, the spotlight remains on macroeconomic factors.
According to Aurelie Barthere, while strong earnings reports have fueled momentum, tech giants like Nvidia must surpass expectations to maintain this trajectory.
He noted that the recent selloff, however, may present opportunities for altcoin investors, particularly in –
“Higher-beta crypto tokens like Solana, which have experienced steeper sell-offs compared to BTC.”
Meanwhile, Kyledoops from Crypto Banter put it best when he said,
“BTC is plummeting today due to China’s AI DeepSeek triggering market reactions. Could the FOMC meeting become a catalyst for a market move that leaves the bears in disbelief?”