As Nasdaq Futures Drop 700 Points, Bitcoin Funding Rates Shift to Negative

Bitcoin market sentiment has turned bearish, mirroring the sharp 700-point drop in Nasdaq futures. The shift to risk-off sentiment is fueled by concerns that DeepSeek, a cost-effective AI startup based in China, could challenge U.S. tech dominance.

Bitcoin’s perpetual futures funding rates, which indicate the cost of holding long or short positions, have shifted into negative territory, according to Velo Data. This flip signals a rise in bearish sentiment, as traders increase their short positions, anticipating further price declines.

Bitcoin has fallen more than 3% since the start of Asian trading hours, briefly dipping below $98,000. Meanwhile, Nasdaq futures have also declined by over 3.5%, with NVIDIA, a key player in AI technology, dropping 10% in pre-market trading.

“The sell-off comes after President Donald Trump authorized a crypto policy working group, although it did not confirm a U.S. bitcoin reserve,” said Petr Kozyakov, co-founder and CEO of Mercuryo. “The success of DeepSeek, an AI startup from China, has spooked tech stocks, as it shows that cost-effective AI models can be built outside of the U.S.”

Despite the negative funding rate, such shifts have historically marked local price bottoms, leaving room for a potential short squeeze as traders are forced to close their positions. However, with the funding rate only slightly negative, it may still be too early to declare that short positions on Bitcoin have become overcrowded.