Bitcoin Futures Dip into Bearish Zone as DeepSeek AI Sparks Market Jitters

For the first time since August, the Bitcoin futures market has flashed a bearish signal, with the futures basis dipping into negative territory. This shift in sentiment, coupled with Bitcoin's recent drop below $100,000, reflects a broader wave of risk aversion triggered by a confluence of factors, including uncertainty surrounding U.S. monetary policy, potential trade disruptions, and a surprising development in the AI sector.

A Bearish Turn: What the Futures Basis is Telling Us

The futures basis, which measures the difference between the price of a futures contract and Bitcoin's current spot price, turned negative amid a rapid de-risking by CME traders, according to K33 Head of Research Vetle Lunde. This bearish signal indicates that traders are willing to sell futures contracts at a discount to the spot price, suggesting a heightened sense of caution and anticipation of potential price declines.

The DeepSeek Effect: A New AI Player Shakes Up the Tech World

Several factors are contributing to this uncertainty. The Federal Reserve's unclear path on interest rates, speculation surrounding potential trade policies under a new administration, and a shockwave from the AI sector have all complicated the outlook for risk assets, including Bitcoin.

The AI shockwave came in the form of DeepSeek, a Chinese startup that unveiled a new AI model on Monday. This model reportedly rivals leading U.S. offerings from companies like OpenAI and Meta, but at a significantly lower cost. The announcement sent ripples through equity markets, particularly impacting the tech-heavy Nasdaq Composite, which dropped 3.1%. Nvidia, a major player in the AI chip market, was also significantly affected.

Tech Earnings on the Horizon: More Fuel for Volatility?

Adding to the potential for volatility, major tech companies, including Meta, Microsoft, Tesla, and Apple, are set to release their earnings reports this week. Investors are particularly sensitive to any news related to AI competition, especially in light of DeepSeek's disruptive entry. QCP Capital analysts warned that any further shocks from corporate results could further weigh on risk assets like Bitcoin.