The rapid emergence of China’s DeepSeek AI has sent shockwaves through financial markets, fueling fears over its potential impact on US tech dominance. Bitcoin and major tech stocks, including Nvidia, saw sharp declines as investors reacted to the AI breakthrough. Meanwhile, US officials are probing whether DeepSeek circumvented Nvidia chip bans via Singapore, raising concerns over export controls. As Washington considers tighter restrictions, Nvidia’s stock faces bearish technical signals, with further downside risks ahead. These developments mark a pivotal moment in the ongoing US-China AI and semiconductor rivalry.
DeepSeek Shakes Markets: Bitcoin Drops, Tech Stocks Tumble
The release of China’s DeepSeek AI model sent shockwaves through global markets, triggering a 6% drop in Bitcoin and heavy losses in tech stocks. The AI’s low-cost development challenged US dominance in the sector, with investors fearing its impact on American firms like OpenAI. The sell-off extended to crypto, reinforcing its correlation with traditional markets. Despite the initial panic, analysts see long-term benefits in cheaper AI, while concerns over privacy and political scrutiny could limit DeepSeek’s influence in Western markets.
US Probes DeepSeek Over Nvidia Chip Ban Loophole
According to Bloomberg, US officials are investigating whether Chinese AI startup DeepSeek acquired restricted Nvidia chips through intermediaries in Singapore, potentially bypassing export controls. The probe follows DeepSeek’s release of its advanced R1 chatbot, raising concerns about China’s AI progress. Nvidia maintains compliance with regulations while officials debate further restrictions on semiconductor sales. With Singapore accounting for 20% of Nvidia’s revenue, policymakers are considering stricter licensing measures to prevent unauthorized chip transfers to China.
Technical Analysis
After rebounding from the high of 152.70 on January 7, NVIDIA’s stock price has since experienced a decline due to various technical signals. The peak at 142.63 failed to surpass the previous high and subsequently gapped down on high volume, dropping below the support level of 129.33. This movement signals a technical bearish reversal known as a failure swing.
The downtrend is further supported by the stock being below both the 20-period and 50-period Exponential Moving Averages (EMAs). Additionally, the formation of a “Death Cross,” where the 20-period EMA crosses below the 50-period EMA, intensifies the downward momentum.
Other technical indicators also support the bearish sentiment. The Momentum Oscillator remains below the critical threshold of 100, indicating sustained selling pressure, while the Relative Strength Index (RSI) has fallen below the neutral level of 50, reflecting bearish sentiment.
Looking ahead, if the current market conditions persist, key downside price targets to monitor include 115.94, 100.66, and 98.52, which may act as potential support levels based on current technical factors. Conversely, immediate resistance levels are found at 129.33, 138.66, and 148.63, which could serve as critical areas of interest if a rebound occurs.
Trump Officials Eye Tighter Nvidia Chip Ban
Officials from the Trump administration are in early discussions about expanding the restrictions on Nvidia’s H20 chip sales to China. This move could further strain US-China technology relations, according to reports from Bloomberg. The H20 was designed to comply with existing export curbs, but concerns over China’s AI progress—highlighted by DeepSeek’s recent breakthrough—are prompting calls for tighter controls. Nvidia, which has already seen sales impacted by previous restrictions, warns that further limits could weaken US firms and push China toward self-sufficiency in semiconductor development.
Conclusion
The rise of DeepSeek AI has intensified market volatility and deepened concerns over China’s advancements in artificial intelligence. The ripple effects have been felt across tech stocks, cryptocurrencies, and semiconductor policies, with the US considering stricter trade restrictions on Nvidia chips. As geopolitical tensions escalate and regulatory scrutiny increases, investors will closely watch how these developments shape the future of AI, market stability, and the global technology landscape.