AI Tokens Plunge Further To 11.7% Following DeepSeek R1 Shock

The AI cryptocurrency sector has fallen 11.7 % to a $36.9billion market cap in the past 24 hours, following the launch of DeepSeek R1, a new free Chinese AI chatbot to rival ChatGPT.

The price drop affected major AI tokens, with projects like Near Protocol (NEAR) dropping 10%, Render (RENDER) falling 14.6%, and Arweave (AR) declining 12.3%.

DeepSeek’s rise as a cost-efficient alternative to established AI models has prompted market reassessment of AI project valuations. The Chinese startup’s ability to create competitive AI capabilities at a fraction of the cost spent by OpenAI, Google, and Meta raises questions about the resource requirements for AI development.

AI cryptocurrencies bleed following DeepSeek launch

The AI cryptocurrency market’s 11.7% slump at press time has affected tokens across various market cap ranges and use cases. Internet Computer (ICP), positioned at 38th, dropped 7% to $8.58, while the Artificial Superintelligence Alliance (FET) decreased 11% to $1.08. The Graph (GRT), a major data indexing protocol, saw its price fall 10.3% to $0.17.

The declines also reached smaller market cap projects. Virtuals Protocol (VIRTUAL) dropped 14% to $2.12, while AIOZ Network fell 15.6% to $0.77.

DeepSeek’s impact rattles AI markets

DeepSeek’s ability to develop competitive AI capabilities for $5.6million, compared to hundreds of millions spent by major tech companies, has investors reconsidering valuations across the AI sector. The Chinese startup’s R1 model matches the capabilities of OpenAI and Meta’s offerings while needing fewer computing resources.

The impact extends beyond price movements in AI tokens. DeepSeek’s success without access to the most powerful AI accelerators, due to US export controls, raises questions about the value proposition of blockchain projects focused on AI infrastructure and computing resources.

Projects providing AI-related infrastructure and services face particular pressure – Render’s decentralized GPU network, The Graph’s indexing services, and Arweave’s storage solutions all saw double-digit percentage drops.

While DeepSeek’s development does not directly compete with blockchain-based AI projects, the new project’s efficiency in AI development with limited resources has affected the overall market.

The stock prices of US technology companies also took a toll after DeepSeek’s launch. The price of NVIDIA stock has plunged close to 18% in the last 24 hours, according to the data from Google Finance. The stock price of Microsoft has also dropped by 2.9%.