Bitcoin Price Plunges After Trump-Musk Twitter Feud
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Bitcoin experienced a sharp drop, nearing $100,000, following a public dispute between Donald Trump and Elon Musk. This triggered a risk-off sentiment among traders, causing the global crypto market cap to fall 4% to $3.33 trillion. Derivative data reveals a significant shift in sentiment. Binance's net taker volume plummeted from $20 million to -$135 million in eight hours, indicating a massive surge in short positions as traders hedged against potential losses. This was the largest intraday reversal on Binance this year, highlighting the market's rapid reaction to influential figures and macro-level narratives. Further evidence of bearish sentiment is seen in the negative shift of BTC perpetual futures funding rates on Binance, dropping from +0.003 to below -0.004. Short sellers were willing to pay a premium to maintain their positions, suggesting heightened fear and potentially overextended downside bets. However, historically, deeply negative funding rates have preceded strong Bitcoin price recoveries. Three previous instances (October 2023, September 2024, and May 2025) showed similar funding shifts leading to significant rallies. While not guaranteed, this pattern hints at a potential market turning point. The exception was in March 2025 following trade tariff announcements. The current situation leaves traders anticipating a possible short squeeze, where price rebounds could force short sellers to cover, potentially amplifying upward momentum.
