Bitcoin futures basis turned negative for the first time since August 2023, following a sharp decline in Nvidia's stock price, which affected the cryptocurrency market.
Bitcoin futures basis turned negative for the first time since August 2023, following a sharp decline in Nvidia's stock price, which affected the cryptocurrency market. K33 Research Director Vetle Lunde highlighted that the drop in Nvidia shares triggered a reaction in the crypto space, causing CME traders to hedge their risks quickly. This led to Bitcoin futures moving into negative territory for the first time in months. Futures basis, the difference between the price of a futures contract and the spot price of Bitcoin, is often seen as an indicator of market sentiment. A negative futures basis indicates a shift to a bearish outlook, with traders more willing to sell futures below the spot price due to heightened risk aversion. On top of this, open interest saw a significant decline of 17,225 Bitcoin in a single day.
The market's bearish sentiment coincides with increasing concerns about global economic uncertainty, including the U.S. Federal Reserve's interest rate policies, potential tariffs under the Trump administration, and the market turbulence caused by DeepSeek. DeepSeek, a China-based AI startup, unveiled a new model that reportedly competes with U.S. tech offerings at a fraction of the cost. This news sent shockwaves through the tech-heavy Nasdaq Composite, which fell by 3.1%.
With this added volatility, Bitcoin briefly dropped below $98,000 in overnight trading but found support above the $102,000 mark. The recent price swings are being driven more by broader risk-off sentiment rather than crypto-specific factors. Bitcoin’s movement seems to be influenced by the uncertainty around the Fed’s interest rate path and the possible ramifications of the DeepSeek announcement on the tech sector.
This week’s earnings reports from major tech companies like Meta, Microsoft, Tesla, and Apple are expected to add to the market’s volatility. Investors are particularly sensitive to competition in the AI sector following DeepSeek's disruptive announcement. Analysts from QCP Capital suggested that the tech earnings could add further downside risk to assets like Bitcoin. Given these pressures, Bitcoin’s futures market is in a precarious state, with traders showing caution and expecting further volatility.
Despite these factors, U.S. equities displayed some resilience in pre-market trading, with S&P 500 futures rising by 0.12% and Nasdaq futures up by 0.24%. Some analysts remain optimistic about Nvidia, pointing to the potential long-term benefits from AI advancements, which could drive further demand for Nvidia’s chips. However, the short-term outlook for Bitcoin and other risk assets remains uncertain, with investors on edge as they await the impact of upcoming earnings reports and broader economic developments.
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