Bitcoin Rebounds as DeepSeek Panic Subsides

The cryptocurrency market experienced a rebound on Monday evening as Bitcoin temporarily climbed back above $102,000. This surge followed a weekend of volatility prompted by significant announcements from DeepSeek, a Chinese AI startup.

Currently, Bitcoin is stabilizing around $102,000, although it 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 their assets back into preferred cryptocurrencies. This trend seems to be fueled by optimism regarding the longer-term effects of AI technology becoming more accessible to the public.

Despite the fluctuations, Dogecoin, a popular meme-based cryptocurrency, rebounded from its worst performance at the start of the year, increasing by 2.6% to reach $0.33. Other notable gainers included BNB and XRP, which rose by 3.6% and 3.2%, respectively.

This recovery aligns with Wall Street analysts providing more measured assessments of DeepSeek's potential market influence, easing the initial panic that had led to an $860 million liquidation in the crypto space and shaken U.S. tech stocks. Bernstein's semiconductor analyst Stacy Rasgon, stated in a note to investors, "Is DeepSeek doomsday for AI buildouts? We don't think so. DeepSeek did not build OpenAI for $5 million." This sentiment suggests that the market's reaction to the emergence of DeepSeek may have been exaggerated.

Meanwhile, analysts from Morgan Stanley indicated that DeepSeek actually presents an alternative approach to efficient model training rather than posing a threat to existing key players in the industry.

The excitement over DeepSeek is partly due to its recent release of Janus-Pro-7B, an open-source AI image generation model that emphasizes multimodal capabilities, which has positively impacted market sentiment.

NVIDIA faced significant losses due to the sudden interest in DeepSeek, suffering a historic $600 billion drop in its market capitalization, which contributed to a staggering $1 trillion loss across the U.S. tech sector. In response to these concerns, NVIDIA attempted to calm investors with a vague statement regarding compliance with export control laws.

A spokesperson for NVIDIA remarked, "DeepSeek's work shows how new models can be created, leveraging widely available models and compute that is fully export control compliant."Bitcoin, DeepSeek, AI