$850M Crypto Flash Crash Sparks Debate Over DeepSeek’s Market Impact

Key Takeaways

• The crypto market registered its first flash crash of 2025, wiping out over $269 billion.
• AI and meme tokens were among the biggest losers, fueled by the Chinese AI app launch.
• Bitcoin also fell to a multi-week low below $98,000.

On Monday, the crypto market saw its first flash crash of 2025 as Bitcoin (BTC) and most altcoins registered double-digit declines.

The crypto crash wiped $850 million in leverage positions across the market and $269 billion from overall capitalization.

The flash crash also registered the first massive decline post-Donald Trump’s inauguration as the 47th President, and market observers have tied the recent crash to the Trump administration and the launch of Chinese AI bot DeepSeek, created at a fraction of the cost of OpenAI’s ChatGPT.

Crypto Bloodbath Wipes $850M

Over the past 24 hours, crypto leverage traders have collectively lost over $850 million in liquidations, with long traders losing the most.

According to data from Coinglass, 312,846 traders were liquidated for a total of $851.44 million. Long traders collectively lost over $790 million, while short traders lost $59 million.

Bitcoin leverage traders were among the biggest losers, accounting for $260 million of the total liquidation, followed by Ethereum (ETH) traders with $110 million. The liquidation surge was aided by memecoin traders betting heavily after Trump’s inauguration.

The Bitcoin price declined by over 10%, falling from a daily high of $105,277 to a new multi-week low of $97,785. Ethereum price recorded a similar slump, falling from a daily high of $3,343 to a multi-week low of $3,024.

On the other hand, memecoin recorded a much broader decline, with Dogecoin (DOGE) falling over 15%, PEPE recording a 30% decline, and the newly launched Trump memecoin falling over 20% due to the market-wide route.

A few market pundits blamed the overleveraged market, especially the meme sector, while others believe the Chinese AI app launch triggered the crash in the traditional stock market. This crash has trickled down to crypto due to the growing influence of institutional investors in the crypto market. 

Chinese DeepSeek Launch To Blame?

Crypto market observers believe the crypto market bloodbath has trickled down from the stock market crash, fueled by ChatGPT rival DeepSeek’s launch.

The impact of the DeepSeek launch was evident in focused, traditional companies, such as Nvidia and crypto AI tokens. Most AI tokens lost over 20% of their market value over the past 24 hours, while a few saw declines between 50% to 70%.

DeepSeek is a Chinese AI app that has shocked the American market. The Chinese AI app rose to the top of the Apple App Store’s free software rankings.

ChatGPT’s Chinese rival was reportedly developed for a mere $5.5 million budget compared to billions of dollars poured into ChatGPT.

The launch and success of the app created panic among investors, who now see many tech stocks in the United States as overpriced. The U.S. stock market’s significant selling resulted in widespread losses, which later trickled down to the crypto market.

The Trump administration has focused especially on advancing crypto and AI.

The President announced a $500 billion investment in the American AI ecosystem and signed several pro-crypto executive orders, tying the two nascent tech sectors together.