Reversal of fortune

After a seismic shift in the technology world prompted a knee-jerk sell-off, risk assets have vigorously snapped back. Stock futures were rising early Tuesday morning and Bitcoin had gained 3.2% to reach $102,600. 

No one will soon forget AI's "Holy $h!+" moment, akin to when the Soviet Union launched its Sputnik satellite seventy or so years ago, setting off a space race between superpowers. The gobsmacking large language model (LLM) breakthrough out of China set off alarm bells surrounding massive capital expenditures involved in AI training, roiling investors who overnight were forced to recalibrate expectations. In the end, the Nasdaq shed 3% while the Dow actually slightly rose.

Among CoinGecko's Big Ten, XRP was the biggest gainer over the past 24 hours, rising 12% to $3.16 as of Tuesday at 7:12 a.m. (EST). It was less than a fortnight ago that the third-largest crypto crossed the $3 mark which had not been breached in seven years. XRP is about 8% off its all-time high of $3.40 reached in early 2018.

Battered on Monday was trendy memecoin-in-chief, Official Trump (TRUMP), which momentarily slid to nearly $26. But TRUMP has returned above $30 following a gain of 14%, according to CoinGecko. TRUMP's ATH was $73 reached on Jan. 19. President Trump's recent announcement regarding a half-trillion-dollar AI investment, Project Stargate, is suddenly under more intense scrutiny, alongside technology stocks and cryptos which can move in tandem.

Nick Ruck, director at LVRG Research, told CoinDesk initial fears about less expensive open-source AI ultimately wound up presenting a buying opportunity for crypto. "The industry isn't in direct confrontation with Chinese AI," Ruck said.

To the contrary, crypto projects can integrate the open-sourced model into their projects for more efficiency, he pointed out.

Chipmaker Nvidia's loss of $600B in market cap yesterday goes down as the worst one-day bout of shrinkage in the history of U.S. stock trading.

Released last week, DeepSeek's free-to-use AI model surged atop the app store charts while the Chinese startup stunned Wall Street and Silicon Valley with claims it only spent a relative pittance to train its system via fewer, less advanced chips in stark contrast to the models of rivals, such as OpenAI, Google and Meta.

Based on its most recent round of funding, OpenAI enjoys a value of nearly $160B. DeepSeek asserts it spent just $6M on its model, considered to be just as good as OpenAI. In the parlance of disruption couched as lunch eating, that's like McDonald's introducing a deluxe double hamburger that costs 14 cents while Burger King still charges $15 for a Whopper.

The news doubly stung considering it was only last week President Trump announced that the U.S. would invest massively to solidify AI dominance. Imagine if JFK's moonshot speech had been followed a few days later by news the Chinese had put a man on Mars. Okay, maybe that's an exaggeration.

However, there's plenty of skepticism surrounding DeepSeek's claims it developed a competitor to ChatGPT at a fraction of the cost. "Critics speculate the [$6M] figure omits costs associated with earlier research and experimentation on architectures, algorithms and data," CoinDesk said.

Scale AI CEO Alexandr Wang suggested DeepSeek has 50,000 advanced Nvidia chips that it can’t admit to because of U.S. export controls. Elon Musk has supported this contention (Seeking Alpha).

Owing to learned thinking abilities, those human-like computer programs known as AI agents can take steps on their own to accomplish specific tasks, such as scouring the cryptoscape for AI-Agent-related coins that could be snatched up at a bargain.

The CoinGecko category, AI Agents, is down 12% over the past 24 hours. However, the largest projects under this umbrella, Virtuals Protocol (VIRTUAL) and Artificial Superintelligence (FET), have largely stabilized (flat or only slightly red) while ai16z (AI16Z) is shading green.

Together, these three tokens comprise almost half of the total AI Agent category market cap ($10B). For a time yesterday, this category lost, in mere hours, some $2.5B worth of cap. Only a few days ago the size of this space was $16B. AI16Z already had been in decline for several weeks, steadily shedding three-fourths of its market cap as the per-token price plunged from nearly $2.50 to 64 cents as of this morning.

AI agents remain poised to transform Web3 by combining autonomy with intelligent decision-making, The Tribune said, referring to use cases such as the streamlining of trading and decision-making processes.

However, roughly 90% of AI agents and their corresponding tokens have come and gone just since the start of the year, enjoying an average lifespan of only 17 days, according to a study by Phut Crypto. Additionally, roughly 75% of traders involved in AI agent tokens are experiencing losses. While this in itself might seem alarming, the high failure rate, experts say, winnows out weak projects.

A gorilla in the market for agent tokens is Virtuals. It's expansion to Solana is being hailed (by Virtuals) as a turbo booster in terms of empowering agents and their human creators.

"Virtuals has become a key platform for launching and integrating AI agents into the cryptoeconomy," CryptoSlate said.

Some of Virtuals' agents, such as VaderAI by Virtuals (VADER), manage portfolios for users who allow the agent to make investments in the larger Virtuals ecosystem. VADER has a market cap of less than $50M. The VIRTUAL token ($1.2B) owes its size to its central role in the Virtuals ecosystem, CryptoSlate explained.

"The total number of holders in the ecosystem is quite high, which can indicate market adoption and potential demand," CryptoSlate concludes.