Bitcoin Rebounds as DeepSeek Panic Subsides

The cryptocurrency market saw a recovery on Monday evening, with Bitcoin briefly climbing above $102,000. This rebound followed a weekend of intense fluctuations prompted by announcements from the AI firm DeepSeek.

Currently, Bitcoin maintains its position above $102,000 but remains approximately 6.5% lower than its all-time high of nearly $109,000 reached on January 20, according to CoinGecko data.

Analyst Dominick John from Kronos Research noted a "noticeable recovery" in the market as investors appear to be reallocating funds to preferred crypto assets. This shift is driven by optimism about the long-term effects of AI becoming more accessible, which is believed to positively influence the market.

Despite the rebound in Bitcoin, another popular cryptocurrency, Dogecoin, experienced its worst performance of the year on Monday, although it has since risen by 2.6% to reach $0.33. Other notable cryptocurrencies such as BNB and XRP also saw gains, rising by 3.6% and 3.2% respectively.

This market recovery corresponds with Wall Street analysts providing balanced assessments of the implications of DeepSeek. Their measured outlook helped ease the initial panic that triggered an $860 million liquidation of crypto assets and disturbed U.S. tech stocks.

In an investor note, Stacy Rasgon, a semiconductor analyst at Bernstein, stated, "Is DeepSeek doomsday for AI buildouts? We don't think so." She emphasized that DeepSeek did not achieve its advancements for just $5 million, implying that the overall market reaction to the Chinese startup was exaggerated.

Additionally, Morgan Stanley’s analysts stated that DeepSeek represents "an alternative path to efficient model training" rather than posing a threat to existing AI leaders.

DeepSeek's recent introduction of Janus-Pro-7B, an open-source AI image generation model emphasizing multimodal capabilities, has further bolstered market confidence.

However, NVIDIA faced significant losses, with its market capitalization plunging by $600 billion, marking the largest single-day loss in history. This decline contributed to a total loss of $1 trillion across the U.S. tech sector. In response to rising investor concerns, NVIDIA issued an ambiguous statement regarding the situation.

A spokesperson for NVIDIA reportedly said, "DeepSeek's work shows how new models can be created, leveraging widely available models and compute that is fully export control compliant," attempting to clarify the potential implications of DeepSeek's advances.

President Trump's Perspective

Last week, President Donald Trump, who has previously adopted a critical stance towards China regarding trade, softened his rhetoric. At a meeting in the Roosevelt Room, he mentioned that his administration is considering a "tariff of 10% on China," significantly less than the 60% he promised during his campaign.

Analysts from QCP Capital warned that the Chinese language model (LLM) poses a potential risk to U.S. equity markets by challenging U.S. AI leadership with innovative, cost-effective open-source technologies. This was echoed by President Trump, who commented on DeepSeek’s emergence during a House Republican conference meeting in Miami. He characterized the launch of the Chinese AI as a wake-up call for American industries, urging them to prioritize competition.

Trump stated, "The release of DeepSeek, AI from a Chinese company, should be a wakeup call for our industries that we need to be laser-focused on competing to win. ... That's good because you don't have to spend as much money. I view that as a positive, as an asset.”

Article edited for clarity and conciseness.

Bitcoin, DeepSeek, AI