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GM. This is Milk Road. The newsletter that keeps you zen, when the rest of the market is panic selling 🧘

Here’s what we got for you today:

WHAT THE HELL IS DEEPSEEK-R1? 🤨

Get this: a small team of Chinese developers recently created an AI model called DeepSeek-R1, as a fun little side project…

And over the weekend, that ‘side project’ has been widely credited with:

1/ Wiping hundreds of billions of dollars from the US stock market! 👇

2/ Taking the crypto market along with it…

3/ And fly kicking ChatGPT from the #1 spot on the App Store.

So, what the hell is so good about DeepSeek-R1?? 

A whooole bunch of stuff, apparently – here’s everything you need to know…

First off – DeepSeek the AI platform has been around since November 2023, but DeepSeek-R1 (the company’s flashy new model that’s got everyone spooked) launched last Monday. 

DeepSeek-R1 is a free-to-use ‘reasoning’ AI model (as opposed to the common ‘responsive’ models), which competes with OpenAI’s $200/month ChatGPT o-1 reasoning model.

Responsive models essentially find answers to problems using a cheat sheet (aka: all of the data it has scraped from the internet), whereas reasoning models work out each answer on their own, using step-by-step logic and (you guessed it) reason – much like a human.

A big part of why everyone is freaking out over DeepSeek-R1 is that it’s more efficient, just as performant as the major US-based reasoning models, and damn-near free to use!

Here’re the finer details on all of that:

1/ Cost Efficiency

DeepSeek-R1 is free to use for up to 50 messages per day – and if you want to go over that limit (say, with a bunch of automated API requests) DeepSeek-R1 is still ridiculously cheap.

Here’s the A/B comparison between ChatGPT o1 and DeepSeek-R1’s API costs:

2/ Compute Efficiency

In September of 2022, the US banned the export of advanced Nvidia AI chips (like the A100 and H100 models) to China.

So when the DeepSeek-R1 team started building the model, they had to make sure it was efficient enough to run on the less powerful hardware available to them.

And they ended up making it so damn efficient that people have been able to run smaller versions of the model locally (aka: on-device, without internet) using an iPhone! 👇

3/ Performance

DeepSeek-R1 – which is rumored to have taken two months and less than $10M in total to develop – pretty much matches (and in some cases outperforms) all of the major US-based AI models.

High quality 🤝 low cost.

PLUS: On top of all of that – DeepSeek-R1 is open source! Meaning anyone can run it, wherever/whenever they want.

“Ok, that’s nice n’ all – but how did one Large Language Model wipe billions of dollars from capital markets??”

– You, probably.

Keep scrolling to find out 👇

DID DEEPSEEK-R1 JUST TANK MARKETS? 😰

From a certain angle, DeepSeek-R1 could be seen as an ‘ecosystem breaker.’

Think of it like this:

Previously, you bought the most capable NVIDIA AI Chips because that’s what you needed to run powerful AI models.

You subscribed to OpenAI Pro because that was the only way you get access to the most performant reasoning models in the world.

You bought the new iPhone 16 Pro because it had Apple Intelligence – an AI model that runs locally on your iPhone.

These kinds of features/solutions help to keep users within each company’s respective ecosystem, and buying their top-tier products…

But DeepSeek-R1 is a free equivalent to OpenAI’s o1 model, is said not to require NVIDIA’s top of the line AI chips, and can even run on mobile devices! 👇

That threat likely plays a part in why tech stocks are a little skittish right now. 

…but is that enough to do this much damage on its own?

Probably not. 

Everyone seems to be overlooking the Bank Of Japan’s recent rate hike decision, and discounting the fact that Trump is continuing to threaten Mexico, Canada, and China (the US’ largest trading partners) with 10-25% tariffs.

And as much as people like to think crypto is its own beast – it’s not immune to big movements in the stock market. 

If people are selling out of tech stocks, there’s a good chance that sell pressure is going to find its way to crypto.

Now, are we worried about our portfolios? No. This too shall pass.

AI companies outpace each other all the time. Google’s DeepMind was the only name in the game for years before OpenAI came along and dethroned it with ChatGPT. 

Then all of a sudden Anthropic’s Claude started to eclipse ChatGPT’s abilities. 

The only real change this time is that DeepSeek is a Chinese owned company.

Our guess is, this whole thing will play out something like this:

The takeaways: Crypto will weather this storm, and more competition in the AI space is a good thing.

Hell – we just got one step closer to having a super intelligence that lives locally on our devices, and runs for next to nothing.

(If you're going to worry – worry about the fact that SkyNet is now closer to reality than it has ever been).

WANT TO KNOW OUR OPINION ON  $XRP, $SUI, $AIXBT AND MORE? 🤔

Ever wondered what we think about the hottest tokens on the market? 

Now you don’t have to. 

Last week we launched our Token Center, giving PRO members instant access to our expert takes – and today we’re walking through our ratings for $XRP, $SUI, $AIXBT and more – live on The Milk Road Show!

Click below to watch it now! 👇

YouTube | Spotify | Apple Podcasts

BITE-SIZED COOKIES FOR THE ROAD 🍪

Uphold is handing out exclusive token reports. All you gotta do is deposit and trade $50 to unlock them. Small effort for some serious alpha.*

Jupiter just burnt 3B $JUP tokens! Where? At a “Burning-Man-meets-crypto-conference” gathering in Istanbul (where they also burned a giant wooden cat statue).

MicroStrategy buys more Bitcoin. Saylor is our one and only saviour who can get us out of this rut. All hail Saylor. - DL News

Look out for the first FED meeting of 2025 this week. Not a lot to say here except “don’t expect a rate cut” (odds are at a whopping low of 0.05%).

We’re hiring! We currently have 3 open positions - so hurry before someone else beats you to it.

Swapping crypto onchain can definitely be daunting. Lucky for you, we’ve made a step-by-step guide on how to buy crypto through a DEX and your wallet.

*This is sponsored content.

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DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.