What is DeepSeek, what is a ‘Sputnik-moment’ and why did this (temporarily) crash Bitcoin?

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Last Updated on 28 January 2025 by CryptoTips.eu

DeepSeek is the new buzzword of the past few days. American investors call it a ‘Sputnik moment’ and partly because of those two mentions, both crypto and tech shares crashed very hard yesterday. What is going on and what can we expect in the coming days?

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DeepSeek

This Chinese app has been one of the most popular in the Apple App store ever since this weekend. It is a free AI that, like ChatGPT, offers help and resolves questions.

However, the Chinese industry claims that DeepSeek does this in a much cheaper and efficient way than the American industry can already do. The AI models from Meta and OpenAI, for example, use a lot of energy and are therefore more expensive to operate. They also need to be powered by masses of Nvidia chips, which the Chinese normally cannot use (DeepSeek has about 50,000 of them available, according to rumors).

Whether the Chinese claim is correct remains to be seen, but if it is true, it will deal a major blow to the American model, and as a result American (as well as Dutch, see ASML) tech shares will fall.

Please note, you can clearly see that it is an app from China as you are not allowed to ask questions about Tiananmen or Taiwan.

Sputnik-moment

Renowned American investor Marc Andreessen called it a “Sputnik moment” for the AI industry in a tweet that went viral. That refers to a moment from October 1957.

On that day, the Soviet Union launched Sputnik 1, an artificial satellite that showed that they were far ahead of the Americans in the field of space and rocket technology. The launch of Sputnik came as a psychological shock to the United States, and was a turning point in the ‘Cold War’.

Whether the Chinese will suddenly be the equal of the Americans in the field of AI remains to be seen, but if so, this is indeed a ‘Sputnik moment’.

Bitcoin crash

When tech stocks crash, Bitcoin usually goes lower as well. When Bitcoin goes lower, altcoins fall too, usually a little harder.

The fact that the month of January usually shows a correction in the year after the halving, the fact that we have not yet seen a major pullback since November and also the nervousness of the market makes it clear that things were always gonna go lower for Bitcoin whenever bad news would arise. The question is where we will find support in the following days.

Am I panicking right now? Not yet because the demand for Bitcoin is still very high. It is however a very interesting moment for the tech world.

Jeroen Kok

Jeroen is one of the lead copywriters on Cryptotips.eu and discusses all recent events in the crypto market. This includes news updates, but also price analyzes and more. He developed his passion for cryptocurrency during the bull run in 2017. He has learned a lot since then. The combination of cryptocurrency and creative writing is perfect for Jeroen and an excellent way to share his knowledge with a wide audience. Find me on LinkedIn / [email protected]
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