Bitcoin Retreats After Strong Run as Oil Rally Threatens to Renew Inflation Pressure

Bitcoin moved lower after reaching a one-month high as crude oil prices surged above $85 per barrel, reviving inflation concerns and pushing investors toward safer assets like gold, silver, and Bitcoin while reducing appetite for altcoins.

The cryptocurrency market declined modestly on Wednesday, with Bitcoin falling about 0.9% from midnight UTC to approximately $65,900. Ether also weakened, dropping 0.5% to around $1,920.

The pullback came after Bitcoin touched its strongest level in over a month on Tuesday, prompting traders to take profits following the recent upward move.

Oil prices became a major influence on market sentiment, with WTI crude breaking above $85 per barrel for the first time since June 12. The rise came as tensions related to the Iran conflict intensified, renewing concerns about inflation and putting pressure on risk-sensitive markets.

Equity markets also showed weakness, with Nasdaq 100 and S&P 500 futures declining. Meanwhile, investors increased demand for defensive assets, sending gold 0.95% higher to $4,118 and silver up 1.2%.

The risk-off mood carried into digital assets, where Bitcoin’s dominance increased to 59%. Traders appeared to rotate capital away from altcoins and stablecoins and toward Bitcoin as the market’s preferred defensive crypto asset.

Derivatives Market Update

Trading activity slows:
Crypto trading volume dropped 12% over the previous 24 hours to $150 billion, while open interest remained steady around $116 billion. With liquidations reaching only about $165 million, the market appears to be consolidating after recent moves.

Market sentiment becomes more balanced:
The 24-hour long/short ratio shifted closer to neutral, standing at 50.59% long and 49.41% short. Although futures contracts always involve equal buyers and sellers, the metric tracks the number of accounts positioned net long or net short. The narrowing gap indicates that bullish conviction has weakened.

HYPE sees increased bearish positioning:
Hyperliquid’s HYPE token fell more than 6% over 24 hours, ranking among the biggest decliners in the crypto market. Futures open interest rose to 42.8 million HYPE, its highest level since June 4. Negative perpetual funding rates and a weak cumulative volume delta (CVD) signal that traders are increasingly betting on further downside.

XLM continues facing selling pressure:
Stellar’s XLM futures open interest increased for the third consecutive day, reaching 1 billion tokens. Negative CVD figures suggest sellers are leading market activity, contributing to XLM’s inability to sustain moves above the $0.19 level.

BTC and ETH positioning remains unchanged:
Open interest for Bitcoin and Ether stayed mostly stable over the past day, indicating limited changes in trader positioning despite the pullback from Tuesday’s highs.

Sellers dominate broader crypto markets:
Most major cryptocurrencies, with the exception of XMR, XAUT, and HBAR, recorded negative 24-hour CVD readings, showing that selling activity remains stronger than buying pressure.

Traders prepare for higher volatility:
Bitcoin’s 30-day implied volatility index (BVIV) rose to 40% from 37.5%, reflecting increased demand for protection against possible price swings. Ether’s volatility index also moved higher as traders prepared for more uncertainty.

Options markets maintain bullish expectations:
Bitcoin call options continued to lead activity on Deribit, with significant trading volume concentrated around the $70,000 and $72,000 strike prices. The demand for calls indicates that some traders remain positioned for future gains despite the current decline. Ether options also favored bullish exposure, with the $3,000 strike becoming the most active contract.

Token Performance Overview

Dash (DASH) was the worst-performing major token on Wednesday, declining 4.1% to $33.44. Hyperliquid’s HYPE also fell 3.42% to $58.79 as it continued its retreat from recent highs.

Midnight (NIGHT) posted the strongest gain over the past 24 hours, jumping 19% after recovering from Monday’s sell-off. Cardano founder Charles Hoskinson praised the project on X, describing it as an “incredible ecosystem” with impressive technology.

Ether.fi (ETHFI) and Ethena (ENA) moved higher despite overall market weakness, gaining 2.63% and 1.27%, respectively, as DeFi-related tokens showed relative strength.

Ondo (ONDO) remained among the week’s top performers, rising 26% over seven days to around $0.40 as enthusiasm around tokenized real-world assets continued attracting investors despite a cautious macro backdrop.

CoinMarketCap’s Altcoin Season Index stood at 50/100, slightly below the previous week’s high, indicating that market participants have returned their focus to Bitcoin amid renewed uncertainty.