#USConsumerConfidence Today, the cryptocurrency market is under pressure as the prices of tokens like XRP, Solana, and Dogecoin have fallen by more than 11%. This is due to unexpected economic and technological changes that led to mass sell-offs in both traditional and cryptocurrency markets.
DeepSeek and its impact on the market
The Chinese application DeepSeek, positioning itself as an alternative to ChatGPT, has caused a global market stir. Notably, its development cost less than $10 million, while ChatGPT required about $17 billion in funding. Despite this, DeepSeek quickly became a leader in the Apple App Store, questioning the effectiveness and resilience of American tech giants.
This skepticism has turned into a correction in the US stock market, where shares of technology companies, including Nvidia, have already started to decline. Investor expectations regarding overvalued artificial intelligence projects have wavered, causing panic and a redistribution of capital.
How has the cryptocurrency market been affected?
The decline in the stock market quickly spread to cryptocurrencies, closely linked to investor sentiment in the tech sector. Bitcoin fell to $98,000, while major altcoins like XRP, Solana, and Dogecoin lost more than 11%.
Tokens related to artificial intelligence experienced particularly strong declines. Virtuals Protocol (VIRTUAL) fell by 22%, while AI Rig Complex (ARC) dropped by 41.7% over the week, marking one of the worst performances among AI-related cryptocurrencies. Even more stable projects like Freysa AI (FAI) and OriginTrail (TRAC) faced declines of 31.3% and 14.8%, respectively.
Macroeconomic reasons for the decline
Main reasons for the cryptocurrency market decline:
1. Skepticism about AI: Investors are reassessing valuations of overvalued projects, negatively impacting stocks and crypto assets related to technology.
2. Global volatility: The emergence of a powerful competitor in the form of DeepSeek from China has forced the market to reassess the dominance of the US in the field of AI.
3. Correction after growth: After a prolonged rise, the market is correcting, which is exacerbated by news of new competitors and technological breakthroughs.
What’s next?
At the time of publication, Ethereum has fallen by 7.3% and is trading around $3066, while Solana and XRP have decreased by 11.5% and 10.4%, respectively.
Despite the current correction, the cryptocurrency market remains attractive for long-term investors. Experts warn that volatility may persist in the coming weeks, especially against the backdrop of changes in technology and global economic processes.
The key to success in such conditions is calmness and a strategic approach. This decline may not be the beginning of the end, but a temporary correction that opens new opportunities for those who are ready for long-term investments.
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