Bitcoin extended its decline below $83,000 as the crypto market weighed Ethereum Foundation researcher Justin Drake’s warning that advances in artificial intelligence could eventually threaten the cryptography protecting major cryptocurrency wallets.
BTC fell to roughly $82,300 during Asian trading before recovering to about $82,800. The cryptocurrency remained around 4% below Tuesday’s high of nearly $86,600, while the CoinDesk 100 was down close to 2% over 24 hours.
Drake called on the crypto industry to begin preparing for what he termed “bunker mode” in an X post that has been viewed almost 4 million times.
His proposal calls for a gradual transfer of funds to new addresses whose public keys have not previously been exposed. Drake said developments in AI-powered mathematics make it reasonable to prepare for the possibility that the elliptic-curve signatures securing bitcoin and ether wallets could be broken in “months not years.”
He cited 722 mathematical results released by OpenAI this week as evidence that the pace of mathematical progress could accelerate.
The proposal drew differing responses from prominent figures in the crypto industry. Ethereum co-founder Vitalik Buterin agreed that AI-driven advances in mathematics pose a risk that should be taken seriously, but cautioned users against rushing to move their holdings.
Samson Mow, CEO of bitcoin technology company Jan3, was far less concerned, telling followers there was no need to panic “because an Ethereum researcher is saying silly things.”
Treasury Yields Remain Elevated
Crypto’s weakness came as pressure in the bond market continued. The 30-year Treasury yield climbed 4 basis points to 5.71%, while the 10-year yield rose to 5.32%, according to CNBC.
The moves came ahead of a $22 billion auction of 30-year Treasury bonds scheduled for Thursday.
Minutes from the Federal Reserve’s September meeting showed that all 19 officials supported the interest-rate increase delivered last month. Most policymakers also considered another increase by year-end potentially appropriate.
The September consumer price index, due Oct. 14, will be the final inflation report released before the Fed’s Oct. 28 policy meeting.
Derivatives Point to Deleveraging
Sellers maintain a slight advantage: The 24-hour taker long/short ratio stood at 48% long versus 52% short. That was little changed from the previous day, when shorts accounted for more than 52%. Futures open interest declined 1% to $150 billion, while trading volume remained around $187 billion. Liquidations dropped to $400 million from $548 million the previous day. Selling pressure remains, but forced liquidations have eased.
Major cryptocurrencies show risk reduction: Notional open interest in BTC, ETH, HYPE, XRP and DOGE has declined by as much as or more than their spot prices. The data suggests traders are generally closing positions rather than aggressively establishing new shorts as prices fall.
NEAR attracts new money: NEAR gained 4% over 24 hours while its notional open interest increased 11% to $1.70 billion. Funding rates were slightly negative, indicating that short sellers were paying to maintain positions, while NEAR’s 24-hour OI-adjusted cumulative volume delta was the strongest among major tokens, pointing to aggressive buying. A continued rally could force short sellers to cover.
SOL shows signs of new short exposure: Solana’s notional open interest rose 1.5% while SOL declined 2%. That combination generally indicates that traders are opening new short positions.
Market selling remains widespread: The 24-hour cumulative volume delta stayed negative for most major cryptocurrencies, including bitcoin and ether. NEAR and SUI were the exceptions, suggesting sellers continued to execute market orders against bids.
Bitcoin volatility rebounds: BVIV, bitcoin’s 30-day implied volatility index, gained 5% after sitting near yearly lows. The rise indicates some renewed demand for options protection, although volatility remains within its recent range. Some analysts have warned that relatively subdued volatility across crypto and Wall Street could prove temporary as bond-market volatility rises.
Options traders lean defensive: Bitcoin’s one-week put-call skew climbed to 10%, while one- and two-month skews turned slightly positive. The move indicates greater demand for downside protection after the largely neutral readings seen the previous day. Ether options showed a similar pattern. Bitcoin and ether calls remained among Deribit’s five most-traded contracts over 24 hours.
Token Market Splits
Solana-based DeFi tokens recovered from Wednesday’s selloff despite SOL itself remaining about 1% lower since midnight UTC.
Jupiter’s JUP token jumped 15% over 24 hours. Raydium’s RAY and Jito’s JTO gained 14% and 10%, respectively, after both Jito and Jupiter had fallen 6% to 8% the previous day.
Tokens associated with networks that emphasize quantum-resistant cryptography also advanced following Drake’s warning.
Algorand’s ALGO led the CoinDesk 100 with a 9% gain since midnight. The network uses post-quantum Falcon signatures for its state proofs. Starknet’s STRK, which relies on hash-based cryptography for its proofs, added 4%.
Privacy-focused cryptocurrencies moved in the opposite direction. Zcash, the largest privacy coin by market value, fell 6% over 24 hours to around $1,240. Cardano-linked privacy token Midnight’s NIGHT declined 8%, while Monero edged 0.5% higher since midnight.
Curve’s CRV gained 11% over 24 hours, while Ethena’s ENA fell 7%, leaving the DeFi sector divided without a clear bullish catalyst.
AI-related tokens continued to weaken. Bittensor’s TAO fell 6% over 24 hours, Venice’s VVV declined 7%, and Grass, a decentralized AI data network, also lost 7%.
