Bitcoin (BTC) funding rates turned negative amid a sharp sell-off in Wall Street’s tech-heavy Nasdaq futures, falling 700 points in pre-market trading.
Bitcoin Funding Rates Turn Negative as Nasdaq Futures Drop 700 Points
The decline follows growing concerns that China’s artificial intelligence startup DeepSeek could challenge U.S. dominance in the sector and trigger a broader sense of risk aversion.
According to Velo Data, BTC’s perpetual futures funding rate has turned negative, indicating that traders are either more bullish or bearish. This suggests that more investors are betting on further price declines by taking short positions.
The leading cryptocurrency fell more than 3%, briefly dropping below $98,000. Meanwhile, Nasdaq futures fell 3.5%, while AI giant NVIDIA lost 10% in pre-market trading.
The sell-off came shortly after President Donald Trump signaled support for a crypto policy working group but stopped short of approving a U.S. Bitcoin reserve, dampening market optimism.
Simultaneously, the emergence of DeepSeek has shaken up the tech industry, as its success demonstrates that low-cost AI models can disrupt incumbent US-based companies.
Despite the bearish trend, negative funding rates have historically signaled local price bottoms in BTC. There is also the risk of a short squeeze, where bears closing positions could push prices back up.
However, analysts warn that the funding rate swing remains narrow and it is too early to call short BTC an overcrowded trade.
*This is not investment advice.
Source: https://en.bitcoinsistemi.com/funding-rates-turn-negative-in-bitcoin-due-to-chinas-deepseek-effect-what-does-it-mean-here-are-the-details/