DeepSeek Turmoil Drains Liquidity—Crypto Inflows Take a Hit

Crypto inflows experienced a significant downturn last week, retreating to $527 million amid volatile market sentiment.

This marks a stark decline in inflows into digital asset investment products compared to the two subsequent weeks leading up to the last one.  

DeepSeek Hype Affects Crypto Inflows

The latest CoinShares report indicates that crypto inflows only reached $527 million in the last week of January, reflecting the influence of broader market trends on investor sentiment. It marks a notable deviation from what was seen during the weeks before that.

As BeInCrypto reported, the two weeks leading to the last saw crypto inflows hit $1.9 billion and $2.2 billion, respectively. CoinShares’ James Butterfill ascribes the retraction in crypto inflows to the hype around DeepSeek, the AI agent that recently sucked liquidity from crypto and stock markets.

“Digital asset investment products saw inflows totaling $527 million last week. However, intra-week flows reflected volatile investor sentiment, heavily influenced by broader market concerns, such as the DeepSeek news, which triggered $530m in outflows on Monday,” an excerpt in the report read.

News on China’s AI platform triggered $530 million in outflows on Monday. While the initial DeepSeek frenzy led to a shrink in crypto inflows, the market rebounded later in the week. There were over $1 billion in fresh inflows. However, it was not enough to sustain the trend of inflows near the $2 billion mark, a threshold set during the second and third weeks of January.

The resilience to maintain positive flows suggests that, despite intermittent pullbacks, investor confidence in the crypto sector remains relatively strong. Bitcoin (BTC) continued to attract investor interest, recording inflows of $486 million last week.

A week ago, DeepSeek-related euphoria led to $1 billion in crypto liquidations in a single day. This exacerbated the industry’s prevailing uncertainty. Furthermore, its impact extended beyond digital assets, rattling crypto miner stocks, artificial intelligence-related equities such as Nvidia, and AI tokens.

“DeepSeek vibes are definitely shaking things up,” said Emily, a popular user on X.

These remarks reflect the widespread uncertainty permeating the industry. However, the industry has seen signs of recovery, particularly among AI agent coins, which rebounded in response to DeepSeek’s misfortunes.

Beyond the DeepSeek-induced setbacks, broader economic concerns, such as trade tensions and US jobs data, could influence inflows into digital asset investment products this week.

As BeInCrypto reported, trade tensions sprouting from President Donald Trump’s new tariffs have already caused over $2 billion in liquidations. According to Coinglass data, over 730,000 traders were blown out of the water on Monday.