Last week, crypto inflows dropped significantly to $527 million. This was a sharp decline from the nearly $2 billion seen in previous weeks. The drop was mainly due to the hype surrounding DeepSeek AI, which affected liquidity in both digital assets and stock markets.
According to a recent CoinShares report, investor sentiment took a hit from DeepSeek’s rise. While there were still positive inflows in digital assets, they were much lower than before. Just before this decline, inflows had reached $1.9 billion and $2.2 billion. However, on Monday, the market experienced $530 million in outflows due to DeepSeek’s influence.
The liquidity shift affected more than just crypto. AI-related stocks like Nvidia and mining companies also felt the impact. This led to wavering market confidence and increased uncertainty. Despite this, Bitcoin showed resilience, attracting $486 million in inflows, indicating ongoing interest from investors.
Later in the week, the market began to recover, with over $1 billion in new inflows. However, this was still below the previous levels of nearly $2 billion per week. The ability to maintain positive inflows suggests that investor confidence in crypto remains relatively strong.
The effects of DeepSeek were a hot topic in financial and crypto discussions. A user on X, Emily, noted that “DeepSeek vibes are definitely shaking things up,” highlighting the uncertainty in the industry. Nevertheless, AI-related crypto assets began to show signs of recovery as DeepSeek’s momentum slowed.
Lennix Lai from OKX commented on the situation, mentioning that while DeepSeek caused a short-term shock, escalating trade tensions are a bigger concern. A temporary pause on tariffs eased some worries, but future developments could lead to more volatility. He also pointed out that institutional involvement and the integration of crypto into mainstream finance would likely keep Bitcoin and other major cryptocurrencies linked to risk assets.
Overall, broader economic factors, including trade tensions and US jobs data, will continue to influence investor behavior. Despite the current volatility, long-term crypto investors are looking beyond short-term changes. The industry has faced downturns before and has historically bounced back.
