This is a segment from the Empire newsletter. To read full editions, subscribe . That’s one way to describe yesterday’s action both in crypto and outside of it. Galaxy Trading summed the action up to a “function of broader crypto market movements” while GSR’s Carlos Guzman said that the AI narrative dominated the day. Basically, DeepSeek — a Chinese AI company — was able to rival OpenAI’s very expensive model for much cheaper on older (and much less expensive) chips, hence the selloff in Nvidia. (Sidenote here: Decide AI’s Jesse Glass doesn’t think that the cheaper GPU story will last because DeepSeek will still need larger GPUs as it scales.) What we then saw was folks scrambling to recalibrate how to approach the big AI plays, some of which, like OpenAI, now have multibillion-dollar valuations. For the crypto side of things, the narrative was much the same according to Guzman. The AI tokens caught up in the selloff were largely overvalued given the use cases currently out there. “I do think crypto and AI agents are a real thing, and we’ll eventually see a lot of real use cases of AI agents that use crypto … But, as often happens in crypto, the tech wasn’t quite there … The excitement got a little bit ahead of where the tech was,” he explained. Galaxy noted that AI tokens weren’t trading near all-time highs before the recent correction, which shows that some aren’t quite sold on how they fit into the space yet. And AI researchers, like Glass, will carry some skepticism until projects can integrate or emphasize edge computing in their projects, instead of just launching tokens. “For AI-focused crypto projects to break out of speculative cycles, they must demonstrate clear blockchain-native advantages — whether through cost efficiencies, trustless execution, or new incentive mechanisms. Accessibility also remains a challenge, as memecoin trading is one of the few areas that has broken through mainstream barriers,” the Galaxy Trading team explained. So does yesterday’s action change a lot of the bullishness we’ve seen around the AI/crypto intersection and these tokens? Doesn’t seem like it. Guzman believes that more development and use cases will reopen the excitement around the tokens. As for the current AI landscape, it’s honestly not looking too bad right now despite the sea of red. The thing is, as Guzman explained to me, in the long run, the DeepSeek saga might actually be healthy. The current crop of AI companies in the US can now use the compute and data to improve their own models, allowing them to replicate and build on what they learned from DeepSeek. I guess there really is always a silver lining. Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter . Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the Forward Guidance newsletter . Get alpha directly in your inbox with the 0xResearch newsletter — market highlights, charts, degen trade ideas, governance updates, and more. The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.
