Bitcoin (BTC) market sentiment has turned bearish, with Wall Street’s tech-heavy Nasdaq futures trading 700 points lower. The risk aversion is driven by concerns that the cost-effective Chinese artificial intelligence startup DeepSeek could significantly challenge U.S. technological dominance.

Bitcoin’s perpetual futures funding rates, periodic payments made between long and short positions in perpetual futures contracts, have flipped negative, according to data source Velo Data. It’s a sign of more bearish sentiment in the market - traders are chasing short positions in anticipation of lower prices.

The leading cryptocurrency by market value has dropped over 3% since early Asian hours, reaching lows under $98,000 at one point, according to CoinDesk data. Futures tied to Nasdaq have dropped over 3.5%, with NVIDIA, the bell-wether for all things AI, down 10% in pre-market trading.

“Today’s sell-off comes after President Donald Trump last week gave the green light to a working group on crypto policy that notably stopped short of confirming that the US would set up a bitcoin reserve. Meanwhile, Chinese artificial intelligence startup DeepSeek appears to have spooked tech stocks as its success suggests it is possible to build AI models that cost less than AI incumbents in the U.S.,” Petr Kozyakov, co-founder and CEO at Mercuryo, said in an email.

Historically, however, the negative flip in funding rates has tended to mark local price bottoms. Besides, there is always a risk of a short squeeze – bears throwing in the towel and squaring off their bets, putting upward pressure on prices. That said, the funding rate has narrowly flipped bearish, meaning its too early to call short BTC as an overcrowded trade.

Bitcoin’s trajectory is rarely a smooth one, and its latest tumble is in stark contrast to what investors and traders expected on the heels of President Donald Trump’s inauguration.

At last check, Bitcoin (BTC) traded at just above $101,000 Sunday night — down 3%.

The Trump factor

Bitcoin enthusiasts were optimistic as Trump began his second term as president, anticipating a wave of pro-crypto policies. Yet, the inauguration speech lacked any nod to digital assets, and the market took notice.

Investors who had bet on a crypto-friendly administration were left disappointed, prompting a wave of sell-offs.

Adding fuel to the fire, a pair of meme coins tied to the Trump brand — dubbed Official Trump (TRUMP) and “Melania” — entered the market with a burst of enthusiasm, only to crash spectacularly.

The Trump token halved in value just days after its debut, while the Melania coin fared even worse, losing 74% of its worth. These flashy but short-lived ventures added instability to an already jittery market.

Economic crosswinds

Meanwhile, robust economic data from the U.S. played a dual role. While the strong performance of traditional markets offered reassurance to some investors, it also diverted capital away from riskier assets like cryptocurrencies. The interplay of these macroeconomic forces further compounded Bitcoin’s struggles.

Glimmers of hope

Despite the turbulence, Bitcoin still holds significant value, trading above $100,000—a level many would have deemed improbable just a few years ago.

In the long term, optimism remains. Larry Fink, CEO of BlackRock, and other crypto bulls and firms that offer exchange-traded funds (ETFs) envision a monumental surge.

Fink predicted Bitcoin could soar to $700,000 as institutional investors deepen their foray into crypto.

What’s next?

For now, the crypto market faces a crucial test of resilience. While Bitcoin’s downturn has shaken confidence, the broader community remains steadfast, seeing these fluctuations as par for the course.

At press time, Bitcoin is valued at approximately $101,477. See below.