NEAR Token Defies Crypto Market Sell-Off as AI Narrative Gains Momentum, Wintermute Says
NEAR Protocol's NEAR token emerged as a leading performer in the artificial intelligence-focused cryptocurrency sector during a broader market downturn, according to a report from market maker Wintermute. While Bitcoin, Ethereum and several major altcoins recorded losses, NEAR benefited from renewed interest in AI-related tokens, a network security development and a short squeeze that accelerated its rally.
The shift came as hawkish signals from the US Federal Reserve put pressure on digital assets. Investors faced elevated government bond yields, substantial ETF outflows and widespread liquidations, prompting capital to rotate away from traditional decentralized finance (DeFi) tokens toward projects associated with artificial intelligence.
Fed Signals and ETF Outflows Pressure Crypto Markets
Minutes from the Federal Reserve meeting indicated that most officials expected another interest rate increase before the end of the year. The report said the yield on 10-year US government bonds reached a multi-year high of 5.24%, adding to pressure on risk-sensitive assets.
Traditional markets showed a different performance. The S&P 500 gained 1.2% over the week as expected corporate earnings growth of 29% year over year offset concerns about higher borrowing costs.
Cryptocurrency markets, meanwhile, experienced significant capital outflows. Spot Bitcoin ETFs recorded $679 million in weekly outflows, their largest since June, while Ethereum ETFs saw $542 million leave the products.
Data from CoinGlass showed $1.19 billion in forced liquidations, including $1.06 billion in long positions. Bitcoin fell 3.2% to approximately $83,000, while Ethereum declined 7.0% amid a reputational shock after an Ethereum Foundation researcher publicly urged users to migrate to new addresses immediately.
NEAR Gains as Investors Shift Toward AI Crypto Tokens
Altcoins faced particularly heavy selling pressure, with the median decline reaching 3.7%. UNI, a recent market leader, dropped 15.8%, while only 11 of the 66 largest cryptocurrency projects finished the week with gains.
Wintermute's report identified a change in investor positioning beneath the broader market weakness. Rather than moving entirely into fiat currencies, some market participants shifted their attention from established DeFi platforms toward cryptocurrencies associated with artificial intelligence.
NEAR stood out in this rotation. The Near Protocol has historically positioned itself as an AI-oriented blockchain, and its token demonstrated relative strength despite the wider market downturn. Following a brief decline, NEAR took the lead among AI-related crypto assets, according to Wintermute.
Post-Quantum Security Development and Short Squeeze Support NEAR
Wintermute identified two factors behind NEAR's performance: a technological development involving post-quantum digital signatures and market positioning that amplified upward price pressure.
The network introduced support for post-quantum digital signatures, a security-focused development intended to strengthen its defenses against potential quantum computing threats. The announcement provided a technological catalyst as investors increasingly focused on AI-related blockchain projects.
Market mechanics also contributed to the token's advance. According to Wintermute, traders continued opening short positions in NEAR as part of broader bearish positioning across the cryptocurrency market. As the token moved higher, short sellers were forced to buy back positions to cover their exposure, creating a short squeeze that added momentum to the rally.
The combination of renewed interest in AI-related assets, the network's security development and forced short covering helped NEAR outperform many other cryptocurrencies during the period covered by the report.
Wintermute Warns Against Risky Altcoin Purchases
Despite NEAR's relative strength, Wintermute cautioned against treating market rebounds as an immediate buying opportunity. The firm said purchasing altcoins during recoveries remained unjustified while US government bond yields had yet to stabilize and net inflows into Bitcoin ETFs had not returned.
Investors are also watching upcoming US Consumer Price Index (CPI) data and financial reports from major technology companies. Those releases could influence expectations for interest rates and help determine whether the broader artificial intelligence investment trend continues to support liquidity across digital asset markets.
NEAR's performance illustrates how sector-specific narratives can attract capital even when the wider cryptocurrency market is under pressure. However, Wintermute's assessment suggests that the sustainability of such rallies will depend on broader financial conditions, investor flows and continued demand for AI-related assets.
data source: u.today
Writer: Ethan Collins
Crypto Journalist
Ethan Collins reports on developments across the cryptocurrency and blockchain sector. His work covers market movements, protocol updates, regulatory changes, and emerging trends in digital assets.
He focuses on presenting complex topics in a clear and accessible manner for a broad readership.
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