DeepSeek Disruption: Is the Crypto Market Facing a Second Dot-Com Bubble?

The crypto market is reeling as fears of a second dot-com bubble have resurfaced, driven by the rise of DeepSeek, a Chinese AI solution challenging the dominance of OpenAI. Despite the absence of regulatory crackdowns or government BTC sales, cryptocurrencies are taking a significant hit. Here’s what experts are saying about this market shakeup.

The DeepSeek Shockwave

Weeks ago, OpenAI revealed that even with its $200 subscription model, high operational costs, including billion-dollar chip investments and immense energy expenses, were eating into its profits. This revelation coincided with a parabolic rise in NVIDIA stock prices, driven by the booming AI sector.

Then came DeepSeek—a Chinese AI product reportedly developed in just two months for $6-7 million. Claiming superior performance to ChatGPT, DeepSeek sparked skepticism over inflated valuations in the AI space, leading to a market-wide sell-off.

Daan Crypto Trades summarized the fallout:

“NVDA lost over $600 billion in market capitalization in just two trading days. That’s equivalent to the combined market cap of ETH and XRP, or nearly 33% of BTC’s market cap, gone in 48 hours.”

Analyst Perspectives

While the market is in turmoil, some analysts remain optimistic. Michaël van de Poppe noted that DeepSeek’s rise could be part of a broader geopolitical strategy. He pointed out that maintaining such an AI platform, especially with its image-processing capabilities, would require enormous server costs.

“DeepSeek’s current pricing, which is 30 times cheaper than OpenAI, suggests it’s operating at a loss. Many believe this is subsidized by the Chinese government as part of its tech war with the U.S. And given that $1 trillion has already been wiped from U.S. stock markets, it seems to be working.”

Poppe also highlighted the resilience of altcoins, noting signs of a bottom in projects like SEI Coin.

“SEI has hit new cycle lows against BTC. This isn’t the end of the bull market—it’s closer to the end of the bear market.”

Implications for Crypto Investors

As the DeepSeek disruption continues to unfold, the broader crypto market remains volatile. Analysts from Dey There suggest that while short-term dips are likely, long-term opportunities could emerge as institutional interest recalibrates.

Investors should watch for macro trends and geopolitical shifts while focusing on risk management. This evolving narrative could shape the future of both crypto and the AI industry.