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Traders Turn Bearish on Bitcoin Following Political Fallout

Abstract representation of cryptocurrency market volatility with downward trends and digital elements in hues of blue.

Bitcoin’s price dropped sharply to nearly $100,000 amid high-profile political tensions between Trump and Musk, triggering bearish sentiment among traders. A significant decline in Binance net taker volume and negative funding rates indicates increased selling pressure. Historically, such conditions have sometimes preceded price recoveries, although exceptions exist. Traders now watch for a possible market reversal or a short squeeze in response to current volatility.

In a notable shift in sentiment, Bitcoin’s value plunged sharply over the last 24 hours, hitting an intraday low of $100,984. This drop comes close to the worrying $100,000 mark, with increased volatility stemming largely from a public spat between US President Donald Trump and Tesla CEO Elon Musk. Their high-profile exchange appears to have sparked a wider risk-off sentiment among traders, contributing to a 4% decline in the global crypto market cap, dropping from more than $3.4 trillion to around $3.33 trillion.

Derivatives data paints a grim picture, too. According to CryptoQuant analyst Darkfost, the Binance net taker volume – which shows the balance between aggressive long and short positions – took a nosedive from $20 million to a striking -$135 million within a mere eight hours. This represents one of the largest intraday reversals in sentiment seen this year on the exchange. It’s clear this was a swift reaction to prevailing uncertainties, leading traders to pile into short positions, thus increasing significant selling pressure on Bitcoin.

Changes were seen in BTC perpetual futures funding rates as well. The funding shifted from a positive trend to negative, plummeting from +0.003 to below -0.004, indicating that short sellers are willing to absorb costs to keep their bearish bets in play. This drastic change reflects a climate of rising fear among traders, as many prepare for potential downside risks due to the recent news.

Historically speaking, whenever funding rates drop into deeply negative territory, Bitcoin has often rebounded strongly. Darkfost highlighted three notable instances: a surge from $28,000 to $73,000 in October 2023, from $57,000 to $108,000 in September 2024, and an increase from $97,000 to $111,000 in May 2025. While past performance doesn’t guarantee future results, these patterns suggest that extreme bearish sentiment could signal a market turnaround. Still, an exception was noted in March 2025, when trade tariff announcements resulted in unrelenting declines.

As traders keep a cautious eye, many are on the lookout for potential signs of a short squeeze. This scenario occurs when a sudden price increase forces short sellers to close their positions, potentially creating upward momentum that could catch the wider market off-guard. With uncertainty hanging in the air, whether Bitcoin can escape its recent downtrend remains to be seen.

Elena Garcia, a San Francisco native, has made a mark as a cultural correspondent with a focus on social dynamics and community issues. With a degree in Communications from Stanford University, she has spent over 12 years in journalism, contributing to several reputable media outlets. Her immersive reporting style and ability to connect with diverse communities have garnered her numerous awards, making her a respected voice in the field.

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