TL;DR
- Bitcoin futures basis dropped into negative territory for the first time since August 2023, indicating caution among traders due to market volatility.
- DeepSeek, a Chinese AI startup, presented a model that competes with U.S. offerings, impacting both crypto and traditional markets, causing a drop in the Nasdaq.
- BTC experienced fluctuations, finding support above $102,000, while uncertainty over U.S. Federal Reserve interest rates and trade policies increase market risk.
In recent days, the Bitcoin market has entered negative territory, with the cryptocurrency’s futures basis falling for the first time since August 2023.
This indicator reflects the difference between the price of a futures contract and the spot price of Bitcoin. Its decline into negative territory suggests that traders are feeling more cautious and are selling futures below the current price of the cryptocurrency. This situation is the result of an increase in volatility, caused by several factors, including the impact of the Chinese startup DeepSeek.
The Nvidia crash yesterday had ripple effects on the crypto market, with CME traders rapidly de-risking.
Bitcoin futures basis fell to negative terrain for the first time since August 2023, while notional OI saw its largest daily decline ever of a massive 17,225 BTC. pic.twitter.com/VM91DeiXcx
— Vetle Lunde (@VetleLunde) January 28, 2025
The crypto market is not the only one affected. DeepSeek recently unveiled an artificial intelligence model that supposedly rivals U.S. offerings at a much lower cost. This announcement shook traditional markets, causing a 3.1% drop in the Nasdaq Composite. The reaction of Bitcoin futures traders was swift, and the widespread de-risking contributed to the drop in the difference between the futures price and the spot price of the cryptocurrency.
Bitcoin Showed Resilience Despite High Volatility
Bitcoin experienced brief drops, even dipping below $98,000, but quickly found support, stabilizing above $102,000. These movements seem to reflect a broader risk-off sentiment in the financial markets rather than a direct reaction to specific sector factors. In addition to uncertainty over the U.S. Federal Reserve’s interest rate path, concerns about Trump’s trade policies and the impact of DeepSeek’s new AI model have further complicated the outlook.
The outlook remains uncertain, and in the coming weeks, earnings reports from major tech companies such as Meta, Microsoft, Tesla, and Apple could further add to market volatility. Analysts have already pointed out that the financial results from these companies could create more uncertainty, impacting risk assets like Bitcoin.
Despite these risk factors, traditional markets have shown signs of resilience. S&P 500 and Nasdaq futures recorded slight gains in pre-market trading. However, the future remains uncertain, and market fluctuations continue to affect various asset classes
