Futures OI drops as institutions aggressively cut exposure to risk assets

The crypto market experienced a significant decline on Jan. 27, with both the spot and derivatives markets deep in the red. This decline occurred alongside a broader market sell-off triggered by the collapse of Nvidia and chip stocks, which led to a sharp downturn in Nasdaq and other risk assets, including Bitcoin.

Nvidia saw a historic $600 billion market cap wipeout—the most significant one-day loss in stock market history. This drop was triggered by the emergence of DeepSeek, a Chinese AI company that developed a highly efficient, cost-effective model capable of rivaling OpenAI’s ChatGPT. DeepSeek sent shockwaves through the AI and semiconductor industries, as many believed it could drastically reduce demand for Nvidia’s high-end chips, which have been the backbone of AI development for over a year.