Crypto Mining Stocks Struggle as AI Tech Stocks Rebound After DeepSeek Shock

Crypto mining stocks continued to slide for a second consecutive day following concerns over AI overvaluation triggered by DeepSeek new model. Meanwhile, tech giants rebounded, with Nvidia leading the recovery.

Crypto Mining Stocks Extend Losses as Tech Sector Stabilizes

The cryptocurrency mining sector faced further declines on January 28, as major tech stocks regained ground after a market scare fueled by China’s DeepSeek AI. DeepSeek’s announcement of its R-1 AI model, reportedly developed for just $6 million and said to rival OpenAI’s ChatGPT, raised concerns over AI stock valuations, triggering a sell-off that impacted both AI and crypto-related equities.

Leading mining firms, including Riot Platforms (RIOT), Cleanspark (CLSK), and MARA Holdings (MARA), all recorded losses, with RIOT suffering the largest drop of 4.37%. Cleanspark fell 2.47%, while MARA edged down 0.14%, according to Google Finance.

The downturn underscores increasing pressure on Bitcoin mining companies as the network’s difficulty rises and competition intensifies. Many miners have been reallocating computing resources toward AI model training to offset tightening profit margins in crypto mining.

Tech Stocks Rebound, Nvidia Leads the Recovery

Despite the previous day’s turbulence, the broader tech sector showed signs of recovery, with Nvidia (NVDA) leading the rebound. The chipmaker, which had suffered a sharp 17% drop on January 27, surged 8.8% as investor confidence returned.

Other major tech stocks followed suit, with Apple (AAPL) rising 3.65%, Amazon (AMZN) climbing 1.16%, Meta (META) gaining 2.17%, Microsoft (MSFT) adding 2.87%, and Google’s parent company Alphabet (GOOG) growing 1.70%.

Market analysts noted that the S&P 500 saw one of its biggest single-day gains, with The Kobessi Letter reporting, “The S&P 500 closes +55 points higher and is now 1% away from a new all-time high.”

AI-Linked Crypto Tokens Also Decline

Meanwhile, AI-related cryptocurrencies saw continued losses, with the sector’s total market capitalization dropping 5.11% in the past 24 hours to $42.33 billion, according to CoinMarketCap.

Venice Token (VVV), a new project claiming to offer private access to DeepSeek’s AI model, led the decline, plunging 20.29%. Virtuals Protocol (VIRTUALS), an AI-driven crypto agent platform, also recorded an 11.75% loss over the same period.

Bitcoin Holds Above $100K Amid Fed Speculation

Bitcoin (BTC) continued to hover near the critical $100,000 support level as traders speculated on upcoming Federal Reserve decisions. With the Federal Open Market Committee (FOMC) meeting scheduled for January 29, many investors are hoping for a rate cut.

However, CME’s FedWatch tool suggests there is a 99.5% probability that interest rates will remain unchanged at 4.25% to 4.50%. The anticipation of this decision has kept BTC trading sideways, as market participants weigh the potential impact of unchanged rates on risk assets.

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