AI agent tokens rebound after DeepSeek faces $5B setback
AI agent tokens are experiencing a notable rebound following a tumultuous week that saw a $5 billion loss attributed to the rapid rise of DeepSeek.
Recent developments have shifted market sentiment, leading to gains in various AI-related cryptocurrencies.
DeepSeek has faced significant challenges, including the launch of Alibaba's Qwen 2.5 AI model, which claims to outperform DeepSeek-V3.
This announcement has raised concerns about DeepSeek's long-term viability in the competitive AI landscape.
Additionally, OpenAI has accused DeepSeek of potentially violating its terms of service by using “distillation” techniques to train its models on OpenAI’s outputs.
“DeepSeek’s r1 is an impressive model... it’s invigorating to have a new competitor!” OpenAI CEO Sam Altman remarked on X.
However, he also emphasised that OpenAI would continue to deliver superior models.
Compounding DeepSeek's troubles, Italy's data protection authority has launched an investigation into its handling of personal data, resulting in the app being blocked from Apple and Google stores in the country.
As a result of these setbacks, investor confidence has shifted back toward decentralised AI projects.
Virtuals Protocol saw an increase of over 8%, while AIXBT (CRYPTO:AIXBT) and Ai16z (CRYPTO:AI16Z) both gained more than 10% as traders redirected their focus.
The market correction follows DeepSeek’s earlier hype, which had overshadowed AI-focused cryptocurrencies and led to a sharp decline in their valuations.
Despite DeepSeek's initial success with its low-cost AI assistant, the current market dynamics are beginning to reveal potential downsides.
Moreover, several fake DeepSeek meme coins have emerged on decentralised exchanges, exploiting the hype surrounding the original project.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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