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Crypto Stocks Hit as AI Plays Sink, Traders Flee Risk Assets - BLOOMBERG
(Bloomberg) -- Cryptocurrency-linked stocks sank on Monday after the success of a low-cost Chinese AI model shook investors confidence, sparking a retreat from risky assets and pummeling shares of companies that were set to benefit from the surge of spending on AI data centers.
Shares of the crypto-mining firm Core Scientific fell 29%, while fellow mining companies like Hut 8, Riot Platforms and Cipher Mining also saw their stocks plunge. Among other crypto names, Coinbase Global shares fell 6.6% and BTCS Inc. shares dropped 13%.
Chinese startup DeepSeek’s new model, which appears to have reached a comparable performance to Western chatbots at a fraction of the expense, sparked a selloff in technology stocks Monday.
Investors are questioning hundreds of billions of dollars in planned spending on the technology, including the money that AI firms were looking at spending on the computing power controlled by crypto miners. Core Scientific last year announced a partnership with the AI startup CoreWeave that was set to generate about $3.5 billion in revenue over 12 years.
Bitcoin fell about 3% to trade around $102,000 on Monday afternoon in New York. The digital currency’s correlation to tech stocks has risen this year, meaning the two asset classes have moved more in lockstep. Ether dropped about 4% and Solana fell roughly 5%.
“This is more of a reflection of risk appetite than something specific to news regarding expectations of deregulation in crypto,” Navellier & Associates’ Louis Navellier wrote in a note as digital assets fell.
(Updates share and crypto moves.)
