AI Tokens Tumble After DeepSeek Shocks Artificial Intelligence Market

Chinese startup DeepSeek shocked the established AI industry by releasing a free, open-source model that can exceed the performance possible by OpenAI. And the company says it was developed at a fraction of the cost of its biggest competitor. 

This has led many to existentially philosophize about the future of the AI industry as we know it. In response, Nvidia’s stock took a 13% tumble, the Nasdaq 100 futures also fell 3.3%, and AI tokens are taking a major hit—despite DeepSeek’s services dropping on Monday morning.

The Crypto AI agents category has fallen 23.5% over the past 24 hours, AI meme coins are down 24%, crypto AI agent launchpad tokens are down 38.3%, and the Virtuals protocol ecosystem is the worst performing crypto category, dropping 42.3%, according to CoinGecko data.

In fact, AI-related categories account for four of the five worst performing crypto categories, according to CoinGecko, six out of the top ten.

Over recent months, those at the intersection of AI and crypto have said that the tokenization of AI models and agents was pushing the technology forward—with Pump.fun and Virtuals becoming the new frontier of artificial intelligence. But the emergence of a new AI startup, that shatters the established reality of the industry and didn’t use a Pump.fun token to fund itself, has cast doubt over this narrative.

As such, the biggest AI tokens have taken major hits. Griffiain (GRIFFAIN), a crypto AI agent launchpad, has dropped 32.4% on the day, leading AI meme coin Fartcoin (FARTCOIN) 25.4%, and AI agent aixbt (AIXBT) 21.4%.

Many established crypto AI projects use models created by American-based AI companies, the likes of OpenAI, Grok, and Claude. Now with the release of DeepSeek showing that these models are inferior, it’s no surprise the tokens are tumbling. However, industry thought leaders believe DeepSeek should actually be seen as good news.

“Stronger models are always good for AI agents,” Shaw, the founder of Eliza Labs and creator of the ElizaOS AI agent, posted on X. “AI labs have been leapfrogging each other in benchmarking and capability for years now. Sometimes Google is ahead, sometimes OpenAI is ahead, sometimes Claude. Today it's DeepSeek.”

By design, DeepSeek’s model is free and open-source so, theoretically, any of the AI agents that crypto bros know and love could adopt the technology to power it. In fact, Shaw’s ElizaOS added support for DeepSeek two weeks ago. 

Before you ask: yes, there is already a meme coin. A Pump.fun launched DeepSeek (SEEK) token skyrocketed to a $55 million market cap on Monday, over three weeks since the token was first created. 

This has led to the trenches filling with tons of DeepSeek-related riffs and memes, the most successful being DeeperSeek (DEEPERSEEK) surpassing a $4 million market cap and DeepCat (DEEPCAT) which nearly touched $4 million.

Edited by Stacy Elliott.