The cryptocurrency market experienced a notable decline today, with Bitcoin dropping over 5% and other major cryptocurrencies falling between 8-10% in value.
The current crypto market downturn appears to be directly linked to movements in the US stock market rather than any crypto-specific factors. The trigger? An unexpected development in the artificial intelligence sector.
DeepSeek, a Chinese AI startup and ChatGPT competitor, has suddenly claimed the top spot as the #1 free app on the Apple App Store, surpassing ChatGPT. What makes this particularly noteworthy is that DeepSeek reportedly cost less than $10 million to develop, compared to ChatGPT's current valuation of $157 billion.
This stark contrast in development costs versus market valuations has sparked concerns among major US investors about potential overvaluation in the US technology sector. As a result, investors began selling off stocks when markets opened, creating a ripple effect that impacted the crypto markets.
The correlation between cryptocurrency and traditional stock markets has become increasingly apparent in recent years, with digital assets often moving in tandem with broader market sentiment. Today's events serve as another reminder of this interconnected relationship.
Market analysts suggest that this downturn may be temporary, as it stems from external factors rather than fundamental issues within the cryptocurrency ecosystem. They advise against panic selling, noting that market volatility is a common occurrence in both traditional and digital asset markets.
This article is for informational purposes only and does not constitute financial advice.