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Today, significant declines occurred across all major and minor stocks in the U.S. market, resulting in a multibillion-dollar loss. Although many analysts anticipated this volatility, the impact was greater than expected. This drop was not triggered by any macroeconomic or political events.
The Role of China’s DeepSeek AI
The primary cause of the collapse in the U.S. stock market is attributed to the Chinese AI startup, DeepSeek. This new AI model has shaken the financial and AI markets, undermining investor confidence. DeepSeek’s ability to offer high functionality at a low budget has led U.S. investors to question their trust in larger AI companies, prompting a surge in sell-offs.
According to StockTwits data, the stock market crash has caused the loss of trillions of dollars from the markets. Shares of NVDA fell by 3%, and Microstrategy (MSTR) dropped by 5%, with other major companies like GME and META also experiencing significant declines. The NASDAQ 100 index fell by 236 points in a single trading day.
Effects on the Cryptocurrency Market
The impact of the stock market crash was also evident in the cryptocurrency markets. Cryptocurrencies experienced a substantial drop, losing 7% of their global market values. Bitcoin 
$109,005‘s price decreased by 5%, while many altcoins lost between 8% and 10% of their value. Cryptocurrencies like Ethereum 
$2,559, XRP, and Solana 
$177 were among the hardest hit.
Some experts are warning investors not to panic and to hold onto their assets. Increased trading volumes indicate that some investors view this downturn as a buying opportunity. Investment professionals emphasize the importance of remaining calm while anticipating a market recovery.
The success of the DeepSeek AI model could signal new developments in the AI industry. Its potential for providing more effective solutions with less budget may increase competition in the sector and pave the way for similar technologies in the market. However, are tech stocks overvalued, and could DeepSeek serve as the needle that pops this bubble? It is important to remember that a significant portion of investors still views BTC as risky as new tech stocks.
Following economic and financial turmoil, how the U.S. stock market and cryptocurrency markets will recover remains a topic of interest. It is crucial for investors to monitor the markets closely and adjust their strategies accordingly.
