Bitcoin market sentiment has turned sour as Nasdaq futures plummeted by 700 points, reflecting growing risk aversion. This shift is largely driven by concerns that DeepSeek, a cost-effective Chinese AI startup, could disrupt the technological dominance of U.S. companies.
Bitcoin’s perpetual futures funding rates, which measure the balance of long and short positions, have recently flipped negative, signaling increasing bearish sentiment. This suggests that traders are positioning themselves for further declines in price.
Since early Asian trading, bitcoin has dropped over 3%, dipping below the $98,000 mark at one point. In parallel, Nasdaq futures have fallen by more than 3.5%, with NVIDIA — a key player in AI — seeing a significant 10% drop in pre-market trading.
“Pessimism has been mounting since President Trump authorized a working group on crypto policy last week, but failed to announce a U.S. bitcoin reserve,” said Petr Kozyakov, co-founder and CEO of Mercuryo. “The rise of DeepSeek also raises concerns, as it proves that AI models can be built more affordably outside of the U.S.”
Although the negative funding rate suggests further downside, it has historically preceded market bottoms. That said, with the funding rate barely negative, the situation could evolve into a short squeeze, potentially driving prices up if short traders are forced to cover their positions.
