The crypto market experienced a dramatic shift last week as inflows into digital asset investment products shrank to $527 million, a stark contrast to the nearly $2 billion recorded in the previous weeks. This decline coincided with a surge in interest surrounding DeepSeek, an AI agent that has been making waves across both crypto and stock markets.

The DeepSeek Effect: A Double-Edged Sword?

According to the latest CoinShares report, the retreat in crypto inflows underscores the impact of broader market trends on investor sentiment. DeepSeek’s emergence led to a liquidity drain, triggering a notable market correction. As BeInCrypto reported, the two weeks leading up to the last saw inflows hit $1.9 billion and $2.2 billion, respectively. However, news of China’s AI platform prompted $530 million in outflows on Monday, disrupting the momentum.

Despite this setback, the market showed resilience later in the week, with fresh inflows exceeding $1 billion. However, this wasn’t enough to maintain the strong uptrend seen earlier in January. James Butterfill, Head of Research at CoinShares, attributes this pullback to the initial frenzy surrounding DeepSeek, which not only affected digital assets but also rattled crypto miner stocks and AI-related equities, including Nvidia and AI tokens.

Bitcoin’s Strength Amid Market Uncertainty

Bitcoin (BTC) remained a focal point for investors, securing inflows of $486 million despite the market’s turbulence. While DeepSeek-driven liquidations wiped out nearly $1 billion in a single day, the crypto sector demonstrated its ability to rebound, with AI agent coins seeing a partial recovery.

Emily, a well-known crypto analyst on X (formerly Twitter), summed up the sentiment succinctly: “DeepSeek vibes are definitely shaking things up.”

Broader Economic Concerns Loom

Beyond the AI-driven turmoil, macroeconomic factors could further shape crypto inflows in the coming weeks. Trade tensions, particularly those stemming from former President Donald Trump’s proposed tariffs, have already contributed to significant market volatility. According to Coinglass data, over 730,000 traders were liquidated on Monday alone, resulting in over $2 billion in losses.

What’s Next for Crypto Inflows?

Despite intermittent pullbacks, the ability to maintain positive flows suggests that investor confidence in crypto remains relatively strong. While DeepSeek’s impact continues to unfold, the broader crypto market appears to be adapting, with Bitcoin and AI-related assets showing resilience.

As February unfolds, all eyes will be on whether the market can regain its earlier momentum or if external economic pressures will introduce new challenges. One thing is clear—the intersection of AI and crypto is reshaping investor behavior, and the coming weeks could be pivotal for digital asset markets.