BTC Breaks Below $83,000 as Ethereum Researcher’s AI Risk Warning Splits Crypto Sector

Bitcoin fell below $83,000 as traders digested a warning from Ethereum Foundation researcher Justin Drake that rapid advances in artificial intelligence could eventually put the cryptography securing major crypto wallets at risk.

BTC dropped to about $82,300 during Asian trading before recovering to roughly $82,800. Bitcoin was still around 4% below Tuesday’s high near $86,600, while the CoinDesk 100 declined almost 2% over 24 hours.

Drake called on the crypto industry to prepare for “bunker mode” in an X post that has attracted nearly 4 million views. He suggested that large holders gradually move their assets to new addresses whose public keys have never been exposed onchain.

According to Drake, progress in AI-driven mathematics could make it possible to break the elliptic-curve signatures used by Bitcoin and Ethereum within “months not years,” potentially before quantum computing becomes capable of doing so.

He pointed to 722 mathematical results released by OpenAI this week as evidence of how quickly AI capabilities in mathematics could advance.

The warning received mixed reactions. Ethereum co-founder Vitalik Buterin agreed that accelerated mathematical progress from AI could create a genuine security risk, but said users should not rush to move their funds.

Jan3 CEO Samson Mow took a more dismissive stance, arguing that there was no reason to panic “because an Ethereum researcher is saying silly things.”

Rising Treasury Yields Pressure Markets

Bitcoin’s decline came as Treasury yields remained elevated. The 30-year Treasury yield increased 4 basis points to 5.71%, while the 10-year yield climbed to 5.32%, according to CNBC.

Investors were also preparing for a $22 billion 30-year Treasury bond auction on Thursday.

Federal Reserve minutes released Wednesday showed that all 19 officials supported the central bank’s September rate increase. Most policymakers believed another hike could be appropriate before the end of the year.

September CPI, scheduled for release Oct. 14, will provide the final major inflation reading before the Fed’s Oct. 28 meeting.

Derivatives Show Deleveraging

Crypto derivatives remained tilted slightly toward sellers. The 24-hour taker long/short ratio was 48% long and 52% short, broadly unchanged from the previous day.

Futures open interest fell 1% to $150 billion, while volume remained near $187 billion. Total liquidations dropped to $400 million from $548 million in the previous 24-hour period.

Open interest in bitcoin, ether, HYPE, XRP and DOGE declined by as much as or more than their spot prices. The pattern suggests traders are reducing leverage and closing existing positions rather than aggressively adding new shorts.

NEAR stood out from the broader market. It gained 4% over 24 hours while notional open interest jumped 11% to $1.70 billion. Funding rates were slightly negative, and NEAR posted the strongest OI-adjusted 24-hour cumulative volume delta among major tokens. If its rally continues, short sellers could face a squeeze.

SOL showed a different setup. Its notional open interest rose 1.5% as the token fell 2%, a combination that often signals the opening of new short positions.

The 24-hour cumulative volume delta was negative for most major tokens, including BTC and ETH, indicating that sellers were continuing to hit bids. NEAR and SUI were the notable exceptions.

Bitcoin’s 30-day implied volatility index, BVIV, climbed 5% from yearly lows as traders showed greater interest in downside protection. Volatility nevertheless remained within its recent range. Some analysts have warned that the current calm across crypto and U.S. equities could be temporary if bond-market volatility continues to rise.

Bitcoin’s one-week put-call skew also moved higher to 10%, while one- and two-month skews turned slightly positive. The shift indicates a more defensive options stance than the neutral positioning seen previously. Ether options showed a similar trend, while BTC and ETH calls remained among Deribit’s five most-traded contracts over the past 24 hours.

Token Performance Remains Mixed

Solana’s DeFi tokens bounced after Wednesday’s selloff even though SOL remained about 1% lower since midnight UTC.

JUP gained 15% over 24 hours, RAY rose 14%, and JTO advanced 10%. The tokens had previously fallen between 6% and 8% during the prior session.

Quantum-resistant crypto projects also attracted buying interest following Drake’s comments.

ALGO climbed 9% since midnight to lead the CoinDesk 100. Algorand uses post-quantum Falcon signatures for state proofs. STRK rose 4%, with Starknet relying on hash-based cryptography for its proofs.

Privacy-focused tokens generally weakened. ZEC fell 6% over 24 hours to around $1,240, while Midnight’s NIGHT declined 8%. Monero was an exception, gaining about 0.5% since midnight.

DeFi tokens were also split, with CRV rising 11% while ENA fell 7%.

AI-related cryptocurrencies remained under pressure. TAO declined 6% over 24 hours, while VVV and GRASS each dropped 7%.