Bitcoin has been on the horizon following an early selloff in the week that shows its correlation with the tech sector
The Bitcoin (BTC) funding rates, a fundamental mechanism in perpetual futures markets, flipped negative in Monday’s trading session. This trend, which may indicate a disturbing signal for Bitcoin bulls, follows Wall Street’s tech Nasdaq futures 700 points drop.
Bitcoin Funding Rate Flips Negative
The funding rate balances the ratio between long and short positions in the perpetual futures market.Â
A positive funding rate suggests that traders in long positions pay a fee to those in short. This reflects a predominance of bull sentiment. Conversely, a negative funding rate indicates that the short pays the long, suggesting a prevalence of a bear perspective.
A negative funding rate could signal a worsening of sentiment, pushing the market toward a local bottom. Additionally, it may indicate a short squeeze risk if the short positioning reaches extreme levels. This usually happens when bear traders are forced to close their positions due to an upward price reversal.
Meanwhile, the 700-point decline in Nasdaq futures stems from concerns that China’s DeepSeek could challenge the United States’ technical dominance. Notably, the DeepSeek R1 model has overtaken OpenAI’s ChatGPT to become the top downloaded app on the Apple Store.
Futures tied to Nasdaq have dropped over 3.5%, while NVIDIA is down 10% in pre-market trading. Petr Kozyakov, co-founder and CEO at Mercuryo, commented that DeepSeek appears to have rattled tech companies with its R1 model. The CEO added that DeepSeek’s performance shows it can build AI models at a lower cost than competing firms in the US.
BTC In Recovery Mode
Historically, the Bitcoin funding rate has declined due to lowered demand for the asset. The price of Bitcoin has plummeted below the $100,000 crucial support level, according to data from CoinMarketCap. While the coin dropped to $98,235 in 24 hours, it is now up 3.8% to $102,000.Â
Bitcoiners may face additional agony if the largest cryptocurrency falls back to a price above $90,000. The asset may challenge lower Fibonacci levels in subsequent downtrends. However, the funding rate has narrowly flipped bearish, meaning it is too early to call short BTC an overcrowded trade.
Disclaimer: The information provided in this article is for informational purposes only. It does not constitute investment, financial, trading, or any other sort of advice. You should not treat any of BGECrypto’s content as such. BGEcrypto does not recommend that any cryptocurrency should be bought, sold, or held by you. Do your due diligence and consult your financial advisor before making any investment decisions.
