The DeepSeek Shockwave: Analyzing Market Reactions and Implementing Quantitative Trading Solutions.

Dear outstanding students of Diamond Ridge Financial Academy, Hello, everyone!

I’m Charles Hanover, and I’m honoured to join you on this journey of exploring the world of quantitative trading. In this ever-changing financial market, it’s not just about learning knowledge but also mastering how to use it to navigate market fluctuations and achieve stable investment returns.

Today, the global markets are experiencing significant volatility, especially in the tech sector. Let’s dive into the latest market trends, analyze the current investment environment, and discuss how to use our quantitative trading system to manage this uncertain market.

The UK stock market opened weak today, with the FTSE 100 Index declining, reflecting uncertain market sentiment and a shift towards safe-haven investments. The mining sector experienced losses due to profit-taking after last Friday’s sharp gains. While defensive sectors like tobacco and healthcare were relatively resilient, the overall market mood remained downbeat. The CBI report highlighted growing concerns about the economic outlook, showing a potential slowdown in business activity over the next three months. Companies are planning layoffs and price hikes to cope with mounting pressures. This aligns with Morgan Stanley’s revised forecast for the UK economy, which downgraded the 2025 GDP growth projection from 1.3% to 0.9%, indicating declining confidence in the UK’s economic prospects.

On top of that, government policies like the hike in employer national insurance contributions are adding pressure on businesses by increasing costs, hurting profitability and limiting expansion. These factors combined have weakened confidence in cyclical industries, reducing overall market risk appetite. As a result, the UK economy faces the risk of stagnation or even recession.

Meanwhile, the US market faced even stronger shocks today due to a tech disruption. China’s DeepSeek released a low-cost, high-efficiency AI model, causing a massive sell-off in global tech stocks. Nvidia, a leading chip supplier, was hit the hardest, with its stock plummeting over 15% intraday, wiping out more than $500B in market value. Other tech giants like Microsoft, Amazon and Tesla also saw heavy losses, leading to a 3% drop in the Nasdaq Index during intraday trading.

This event’s impact went beyond the US, spreading to Europe as tech stocks tumbled globally. At the same time, rising risk aversion drove investors to the bond market, lowering yields. Even BTC wasn’t spared, with prices pulling back significantly.

While the market shock caused by the DeepSeek event is temporary, its long-term implications are significant. This disrupts the existing AI giants in the short term, pushing them to reassess their R&D and capital spending strategies. However, in the long run, DeepSeek’s breakthrough represents a new era in the AI industry, offering more efficient and cost-effective solutions. This technological progress is expected to accelerate AI adoption and benefit the industry as a whole. Analysts believe such disruptions may cause short-term pain but ultimately lead to better resource allocation and healthier industry growth. Let’s keep pushing forward as we learn and adapt to these market changes!

Let’s take a closer look at the patterns behind the recent price movements. Many of you may have noticed that tech stocks also saw significant pullbacks today after Bitcoin’s sharp drop last night. This connection is no coincidence. There’s a deeper logic behind it. First, we need to understand the shared traits between tech stocks and crypto. Both are fundamentally driven by technology. Many tech companies rely on a core technology project to support their valuation and growth.

For example, Tesla’s battery technology and Nvidia’s chip development are central to their competitive edge. Similarly, the projects behind crypto operate in the same way. They’re often built on specific technologies, like Eth’s smart contract capabilities or BTC’s blockchain consensus mechanism. Essentially, crypto tokens can be seen as the “proxy stocks” of blockchain projects. They reflect technological progress and market recognition while being highly sensitive to market conditions due to their liquidity.

BTC’s pullback last night may have triggered a chain reaction, as seen in today’s performance of tech stocks. This isn’t just a result of investor sentiment but also highlights the market’s sensitivity to technological developments. Both tech stocks and crypto are considered high-growth, high-risk assets, and their volatility often resonates. When one asset class experiences significant fluctuations, it prompts investors to reassess related assets, leading to further price movements.

We also can’t ignore the impact of recent international political and economic events on market sentiment. Yesterday, tensions between the US and Colombia escalated into a trade conflict. Trump announced an emergency 25% tariff on Colombian goods after Colombia refused to allow US military aircraft to land. This tariff not only signalled heightened geopolitical tension but also raised concerns that the US might impose similar measures on other countries. These worries quickly spread, fueling risk-averse behaviour in global markets.

The impact of such trade policies is multifaceted for tech stocks and crypto. On the one hand, global collaboration in technology and the free flow of data are critical to advancing AI and blockchain technologies. If trade disputes worsen, these exchanges will face restrictions, slowing innovation and negatively affecting blockchain project development. For example, the DeepSeek incident over the weekend highlighted how the US’s AI technology restrictions have disrupted global tech information flow, resulting in shocks to the industry and today’s drop in tech stocks. On the other hand, market uncertainty drives investors to avoid high-risk assets, making tech stocks and crypto the first to come under selling pressure.

Some of you might be wondering what crypto is. And how is it different from traditional stocks? Simply put, crypto is a financing tool issued through blockchain technology. In essence, it’s similar to the stocks issued by publicly traded companies. Take BTC, for example. It can be seen as the first “listed project” of blockchain technology, attracting global investors through its token system. However, unlike traditional stocks, crypto has a unique advantage: their liquidity as a form of currency. While traditional stocks can be traded on markets, they can’t be used directly for payments. On the other hand, many crypto can be both an investment and a payment method. For example, in some countries, you can use BTC to buy goods, pay for services, or even use it as legal tender.

That said, this advantage also comes with higher risks. Crypto is far more volatile than traditional stocks, meaning investors need to have stronger risk tolerance and market insight. At the same time, the regulatory environment for crypto is still evolving, which adds some policy risks. Despite these challenges, the potential of crypto as an emerging asset class is undeniable, backed by its technological innovation and future applications.

To understand the essence of crypto, we need to look at their origins and the forces driving them. The 2008 financial crisis was a global event that changed how people viewed traditional financial systems. During the crisis, the value of fiat currencies sharply dropped as governments issued large amounts of money to stimulate their economies. This not only caused inflation but also turned fiat currencies into tools for certain groups to accumulate wealth. What’s more surprising is that fiat money has almost no intrinsic value. For example, it costs only about 15 cents to print a $100 bill. Its ability to buy $100 worth of goods depends entirely on the trust in the US government. But when the financial crisis hit, trust in the US government and the financial system was shaken, exposing the fragility of traditional finance. In this context, a new type of currency that didn’t rely on government backing, BTC, came into the picture.

BTC was introduced in 2008 by a mysterious figure named Satoshi Nakamoto, who published a paper explaining an electronic cash system based on blockchain technology. The key idea was decentralization, ensuring that currency issuance and transactions didn’t rely on any third party. This innovation fundamentally changed how money works and addressed people’s distrust of government-backed financial systems.

At first, BTC didn’t gain much attention. When it was created, its price was less than a penny. Many thought it was worthless. But over time, the market started recognizing its potential. From a few cents to today’s price of $100K per coin, BTC has transformed from a niche concept into a mainstream asset. BTC has faced countless ups and downs throughout this journey, but its core technology and principles have remained steady.

BTC hasn’t just made history with its price; it’s also achieved groundbreaking success in its financial role. Known as “digital gold,” BTC shares traits similar to gold, such as scarcity and resistance to inflation. Its total supply is strictly capped at 21M coins, avoiding the problem of over-issuing seen in traditional currencies. Plus, its decentralized nature means any single government or organization doesn’t control it. These qualities have led many countries to view BTC as a strategic reserve asset. In the US, several states have even included BTC in their government reserves, recognizing not just its value but also the importance of the technology behind it. Analysts predict BTC’s price could surpass $200K this year, further solidifying its place in the global financial market.

At the same time, the form of crypto continues to evolve. From the early days of BTC to today’s wide variety of tokens, they all share a mission to drive technological progress. Modern crypto is more than just a financial tool; they’re a catalyst for innovation. Powered by blockchain technology, these token projects provide a secure and efficient platform for recording and storing key technical information, supporting technological advancements.

Take self-driving cars as an example. This is one of the most important areas of modern tech development. The main challenge for self-driving tech is improving safety and real-time data sharing. Blockchain technology has enormous potential here. By using crypto and blockchain, vehicles can record their operating status in real-time and share this data with other cars or infrastructure. This transparency and immutability greatly enhance the safety and efficiency of self-driving systems. The same concept applies to other tech fields like AI, big data and IoT. The rapid growth of these cutting-edge areas relies heavily on the support of crypto and blockchain technology.

The active and dynamic nature of the crypto market not only keeps it at the forefront of tech development but also gives it unique advantages in real-world trading. Without a doubt, advancements in technologies like AI are making the crypto market more efficient and intelligent. However, compared to traditional stock markets, crypto prices tend to respond much faster. This agility comes from its unique 24/7 trading system. Day or night, no matter where investors are in the world, any major news will immediately impact crypto prices. This around-the-clock trading mechanism allows market prices to reflect the latest information in real time, giving investors stronger tools for risk management.

In comparison, the stock market’s trading hours are much more limited. Whether it’s the UK or US stock markets, trading typically lasts just a few hours a day. Outside those hours, the market is closed, adding extra challenges and risks for stock investors. For example, last Friday, Nvidia closed at $142.6. Over the weekend, negative news caused the stock to open today with a gap down at $124.8, a 17% drop during the session. As shown in the chart, there was almost no opportunity to trade within that price range. While some investors can use after-hours trading, its short duration and stricter rules make it difficult for most to avoid such risks effectively.

In contrast, the crypto market reacts to negative news much faster and more directly. For example, Bitcoin's price quickly moved when Trump announced emergency tariffs on Colombian goods last night. As shown in the chart, when BTC broke below the lower Bollinger Band and formed a clear downtrend, investors holding long positions could stop their losses immediately to manage risk. After confirming the trend, they could even switch to short positions to profit from the downward move.

Sharp learners may have noticed this movement perfectly aligns with typical short signals in the Bollinger Bands (BOLL) and "price trend theory." More importantly, the quantitative trading system accurately captured this critical signal, which sent timely trade alerts to guide investors with clear actions. This real-time responsiveness highlights the core advantage of crypto trading over traditional stock markets.

Because of this, our team chose crypto as the primary focus during the public test of the quantitative trading system. Crypto's sensitivity and 24/7 trading allow us to test better how the system reacts to real-time market info. Some of you may have already noticed during the public test that trading crypto feels more straightforward and efficient compared to tech stocks. Although both have some volatility, recent market data shows that major crypto like BTC tend to move less dramatically. For example, Nvidia dropped over 12% during today's session, while BTC's biggest drop was just 4.5%, and Eth fell only 7%. Despite the volatility, crypto's price trends and transparent info offer investors more trading opportunities, making it a more accessible option for everyday investors.

As a result, the quantitative trading system has demonstrated strong profitability during the recent public test. Many participants have achieved consistent profits by strictly following the system's trade signals. It's important to remember that whether you're using test funds or your own money, following the system's signals is crucial. This not only helps you navigate the complexities of the market but also ensures you achieve the returns you're aiming for.

That being said, a few participants recently experienced losses because they didn't adhere to the system's signals. This serves as a reminder: investing demands caution and discipline. Acting impulsively can jeopardize your profits and even lead to unnecessary capital losses. If you've been approved for the second round of the public test, use this opportunity to understand the system's strategy logic, practice trading, and contribute to the system's improvement. Feel free to share any questions or suggestions during the public test with our assistants. Your feedback is instrumental in refining the system's features and data-handling capabilities.

Through today's discussion, we can see that crypto is not only deeply connected to tech stocks but also a promising field. Bitcoin rose from the ruins of the financial crisis, offering global investors a new choice with its technological innovation and vision. This is closely tied to the investment areas we focus on, revealing the huge opportunities in technology-driven assets.

At the same time, it brings more thoughts. Despite the market's sharp fluctuations today, which are causing some impact on our holdings, such fluctuations are inevitable in a global market with widespread declines. As we have emphasized repeatedly, market ups and downs are part of investing and are a core test of systematic trading strategies.

In this environment, the advantages of quantitative trading systems are even more prominent. By capturing real-time market signals, the system can quickly adjust strategies and accurately identify risk points, providing optimal risk-hedging solutions. Whether through dynamic stop-loss and take-profit or using hedging tools to reduce position risks, the system shows excellent adaptability and profit potential in this process.

Therefore, in a volatile market, there's no need to panic. On the contrary, this is an excellent opportunity to enhance trading discipline and execution. We must learn to embrace market uncertainty and use the system's technical support to turn risks into profits. As long as we strictly follow the system's prompts and maintain patience and rationality, we can stand firm in a complex market environment.

Finally, I would like to thank every student for their trust and support of the quantitative trading system and Diamond Ridge Financial Academy. Your participation and feedback not only help improve the system but also provide valuable perspectives for us to explore the forefront of financial technology.

With the public testing phase progressing, the accuracy and stability of the quantitative trading system are continually improving, and we are confident about the future. After the system is officially launched, we look forward to continuing to work with you all, using intelligent trading tools to seize market opportunities and achieve sustained wealth growth.

In today's era of deep integration between technology and finance, investors face unprecedented challenges and opportunities. Moments like these allow us to participate in the global market in a more efficient and scientific way. We firmly believe that every technological advancement brings new hope to investors, and every innovative tool helps our wealth make further progress.

Let's embrace the wave of technological development together, seize the opportunities given by the times and step into a brighter investment future! Thank you again for your support and trust!