AI agent tokens are experiencing a resurgence after suffering a $5 billion loss this week due to DeepSeek’s sudden popularity. 

Several challenges for DeepSeek emerged today, shifting market sentiment and fueling gains in AI-related tokens.

DeepSeek Faces Mounting Pressure

On Wednesday, Alibaba unveiled Qwen 2.5, an AI model it claims outperforms DeepSeek-V3. This announcement shook investor confidence in DeepSeek’s sustainability in the AI sector.

Additionally, OpenAI accused DeepSeek of using “distillation” techniques to train its AI models on OpenAI’s outputs. This is a potential breach of OpenAI’s terms of service. 

“Deepseek’s r1 is an impressive model, particularly around what they’re able to deliver for the price. We will obviously deliver much better models, and also, it’s legit invigorating to have a new competitor! We will pull up some releases,” Sam Altman, OpenAI CEO, wrote on X (formerly Twitter). 

The technique allows smaller models to replicate the performance of larger ones at a fraction of the cost. More importantly, it raises ethical and legal concerns within the AI research community.

Further complicating DeepSeek’s troubles, Italy’s data protection authority initiated an investigation into its use of personal data. 

As a result, DeepSeek’s app has been blocked from Apple and Google stores in Italy. 

“DeepSeek is not that special, the only thing that makes it better is that you can use it for free. China knew that USA won’t compete with free and cheaper products. USA, instead

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Author: Mohammad Shahid