Bitcoin dropped below $84,000 early Wednesday as a surge in oil prices weighed on cryptocurrencies and triggered a sharp increase in liquidations.
BTC moved under $84,000 shortly after midnight UTC after Iran intensified attacks on tankers in the Strait of Hormuz. Brent crude climbed above $101 a barrel, while Treasury yields and the U.S. dollar also moved higher.
The sell-off was more severe among smaller cryptocurrencies. The CoinDesk 80 index, which tracks a broad selection of smaller tokens, fell almost 4% over 24 hours, compared with a 2.5% decline in the CoinDesk 5. DeFi tokens dropped nearly 6%, while the Memecoin Index lost about 5%. SAND, PUMP and STX were among the few tokens to post gains since midnight UTC.
According to CoinGlass, crypto liquidations surged 235% to $547 million over the past 24 hours. Ether accounted for $174 million of the liquidated positions as ETH traded around $2,600, down 3.5% since midnight.
Bitcoin had still been receiving support from U.S. spot ETFs before the market downturn. The funds attracted $119 million in net inflows Tuesday, according to SoSoValue, marking their fourth inflow day across the past five sessions.
Fed Minutes Could Shape Rate Expectations
The Federal Reserve’s minutes from its September meeting are due later Wednesday. Policymakers raised rates by 25 basis points at that meeting, but softer employment data has reduced expectations for another increase this month, LVRG Research chief analyst Dan Khus told CoinDesk.
Investors will be looking for clues about whether Fed officials favor waiting or remain open to another rate increase before the end of the year, Khus said.
Derivatives Market
Trading activity rises as liquidations accelerate: Futures volume climbed 16% to $182.85 billion over 24 hours, while open interest slipped 1% to $152.60 billion. Liquidations increased 216% to $548 million, and short positions represented more than 52% of taker volume. The combination of stronger volume, almost unchanged OI and seller-dominated flows suggests traders are adjusting existing positions rather than building fresh bullish exposure.
Bitcoin leverage remains below previous highs: BTC futures OI increased to 660,000 BTC, extending its recovery from 626,000 BTC on Sept. 30, an 11-month low. However, OI remains well below the 800,000 BTC record reached earlier this year, suggesting the rebound has not yet translated into significant leveraged bullish positioning.
Whale sentiment varies across exchanges: CoinGlass data shows whale accounts and positions on Binance leaning bullish on BTC, while those on OKX are bearish to neutral. Binance whale positioning is bearish for ETH, SOL and XRP, highlighting the lack of a unified directional view among larger traders.
Ether open interest continues to recover: ETH futures OI rose to 13.22 million ETH from 12.5 million a day earlier. Holding above that level would mark a break above the downtrend line extending from May’s peak of about 15.95 million ETH, potentially signaling renewed interest from derivatives traders.
STX attracts fresh long positions: Stacks’ STX gained nearly 6% over 24 hours, making it the best-performing token among the top 100. Its futures OI rose 3%, with the simultaneous increase in price and open interest suggesting new longs. AVAX and DOT also recorded strong OI increases.
Funding rates and order flow turn negative: Perpetual funding rates for major cryptocurrencies including BTC and ETH became slightly negative, meaning shorts are paying longs. The 24-hour cumulative volume delta for major tokens also remained negative, indicating stronger selling through market orders.
Volatility remains unusually low: Bitcoin and ether’s 30-day implied volatility measures remain close to their yearly lows, as does Wall Street’s VIX. Bond-market volatility, however, has been rising, prompting some observers to expect the difference to narrow. Low implied volatility also means options remain relatively inexpensive for traders seeking hedges.
Bitcoin calls remain popular: Deribit data shows bitcoin calls with strikes above $80,000 continue to account for a large portion of 24-hour options volume. Skew remains broadly neutral despite expectations for additional upside. Ether options display a similar pattern.
Altcoins Under Pressure
Ethereum Layer-2 tokens were among the largest decliners in the CoinDesk 100 after CoinDesk reported that Pudgy Penguins’ Abstract had become the second Layer-2 network to announce a shutdown within a week.
Optimism fell 10% over 24 hours, the biggest loser in the index. Mantle dropped close to 10%, while Arbitrum declined around 7%. PENGU, the token linked to Abstract’s parent project, lost more than 7%.
Solana fell about 1% over 24 hours, outperforming many major cryptocurrencies, but several Solana-based tokens posted larger losses. Jito declined nearly 8%, while Jupiter fell 6%.
ADA dropped 7.5% to around 26 cents, giving back some of its recent gains after reaching above 27 cents Monday, its highest level since May. The decline came despite Cardano introducing functionality that allows token issuers to freeze, seize and restrict assets.
Uniswap fell nearly 9%, Lido declined 8%, and both PancakeSwap and Pendle lost close to 8%.
SAND was a notable exception, rising 9% over 24 hours to lead the CoinDesk 100. The token had already gained 37% on Oct. 2. STX advanced 4%, while Monero added roughly 1%, making them among the few major tokens to remain higher.
