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The AI coin market took a significant hit earlier today, as Chinese AI startup DeepSeek made waves with its affordable AI models, challenging the dominance of U.S. tech giants. Popular AI tokens like Near Protocol (NEAR), Internet Computer (ICP), Render (RENDER), and Filecoin (FIL) dropped 8-10% in value, contributing to a broader 7.66% market cap loss, which fell below $44 billion.
There is a sheer fear in the market as DeepSeek can significantly disrupt the AI market in the US causing millions of losses to US companies. This came after Trump showed his interest in AI projects after the election win. Right now US companies are figuring out how to beat the Chinese AI threat, let’s dive in.
DeepSeek’s Competitive Edge Shakes Silicon Valley
DeepSeek’s emergence is particularly disruptive due to its low-cost AI infrastructure. Unlike U.S. companies like OpenAI and Anthropic, which invest over $100 million in building AI models like GPT-4 and Claude, DeepSeek achieved comparable performance for just $6 million. The startup uses less advanced AI chips, but its efficiency is raising eyebrows, especially as its app climbs to the top spot on the Apple Store.
Former BitMEX CEO Arthur Hayes suggested that DeepSeek’s rise could prompt global investors to rethink their heavy reliance on U.S. tech and bonds, challenging the idea of U.S. dominance in AI and technology. In the meanwhile, the market felt the heat, with the Nasdaq 100 futures dropping 2% and tech stocks like Nvidia, Qualcomm, and Broadcom seeing declines.
Analysts See Opportunity Amidst the Dip
Despite the sharp correction, some analysts view this as a “buy-the-dip” moment. Daniele, a popular market analyst, explained that DeepSeek’s affordability could help scale AI applications globally by reducing the entry barriers for users. He believes that rather than hurting the AI coin market, DeepSeek’s innovation could help drive growth in the industry.
DeepSeek’s success is underscored by its rapid integration into the global AI scene, where it’s already making waves in AI benchmarks like AIME, MATH-500, and GPQA. While OpenAI’s ChatGPT still leads in certain areas, such as coding, DeepSeek’s performance gap is narrowing, signaling a positive shift in the market.
In response to the growing threats, Meta has set up an emergency team as China’s DeepSeek launched cheaper and more efficient AI models, posing a serious challenge to Western tech. With 17 to 27 times lower prices DeepSeek will surely rule the market if top companies take it lightly.