Rising Oil Prices Send Crypto Liquidations to $547 Million

Bitcoin slipped below $84,000 on Wednesday as a sharp rise in oil prices weighed on risk assets and triggered a fresh wave of liquidations across crypto markets.

BTC fell through $84,000 shortly after midnight UTC as Iran escalated attacks on tankers in the Strait of Hormuz. Brent crude moved above $101 a barrel, while U.S. Treasury yields and the dollar also climbed.

The broader crypto market declined more sharply than bitcoin. The CoinDesk 80 index was down nearly 4% over 24 hours, compared with a 2.5% decline in the CoinDesk 5. DeFi tokens fell almost 6%, while the Memecoin Index dropped about 5%. SAND, PUMP and STX were among the few cryptocurrencies that remained higher since midnight UTC.

Total crypto liquidations jumped 235% to $547 million over 24 hours, CoinGlass data showed. Ether positions represented $174 million of the liquidations, while ETH traded near $2,600, down 3.5% since midnight.

The decline came despite continued demand from U.S. spot bitcoin ETFs. The funds attracted $119 million in net inflows Tuesday, according to SoSoValue, extending their positive streak to four inflow sessions in the past five.

Fed Policy Comes Into Focus

Markets are also awaiting the Federal Reserve’s minutes from its September meeting, scheduled for release Wednesday. The central bank raised rates by 25 basis points at that meeting, while weaker employment data since then has reduced the likelihood of another hike this month.

According to LVRG Research chief analyst Dan Khus, traders will examine the minutes for clues about whether policymakers are prepared to remain patient or could still consider another rate increase before the end of the year.

Derivatives Show Limited Bullish Conviction

Crypto futures activity increased as prices moved lower. Futures volume rose 16% to $182.85 billion over 24 hours, while open interest declined 1% to $152.60 billion. Liquidations climbed 216% to $548 million, with shorts making up more than 52% of taker volume.

The increase in volume alongside largely stable open interest and dominant selling activity points to traders repositioning rather than establishing a new wave of bullish leverage.

Bitcoin futures open interest recovered to 660,000 BTC, up from 626,000 BTC on Sept. 30, when it reached an 11-month low. The figure remains well below the year’s high of 800,000 BTC, suggesting that leveraged bullish bets are still relatively restrained.

Whale positioning is similarly divided. Binance whale accounts and positions show a bullish bias toward BTC, while OKX positioning is bearish to neutral. On Binance, large traders remain bearish on ETH, SOL and XRP.

Ether futures open interest increased to 13.22 million ETH from 12.5 million. If the recovery persists, it could move OI above the downtrend that began at May’s peak of about 15.95 million ETH, potentially indicating renewed interest in ETH derivatives.

STX was among the strongest performers, rising almost 6% over 24 hours. Its futures OI increased 3%, meaning price and open interest rose together, a setup consistent with new long positions. AVAX and DOT also recorded notable OI increases.

Perpetual funding rates for BTC and ETH turned slightly negative, indicating that short traders were paying long traders. Negative 24-hour cumulative volume delta readings across major tokens also pointed to stronger selling pressure.

Low Volatility Contrasts With Market Stress

Despite the sharp price moves, bitcoin and ether 30-day implied volatility remained close to yearly lows. The VIX was also near its annual low, even as volatility in the bond market increased.

The unusually low implied volatility has kept options relatively inexpensive for traders seeking downside protection or other hedges.

Bitcoin calls with strikes above $80,000 accounted for a significant portion of 24-hour options trading on Deribit, while options skew remained broadly neutral. Ether options showed a similar structure.

Altcoins Extend Losses

Ethereum Layer-2 tokens were among the market’s weakest performers following reports that Pudgy Penguins’ Abstract had become the second Layer-2 network to shut down within a week.

Optimism fell 10% over 24 hours, making it the biggest loser in the CoinDesk 100. Mantle declined about 10%, Arbitrum dropped roughly 7% and PENGU fell more than 7%.

SOL lost around 1%, although several tokens within the Solana ecosystem suffered larger declines. Jito dropped nearly 8%, while Jupiter fell 6%.

ADA declined 7.5% to about 26 cents after climbing above 27 cents Monday, its highest level since May. The decline came despite Cardano introducing functionality that allows issuers to freeze, seize and restrict assets.

UNI fell nearly 9%, LDO declined 8%, and both CAKE and PENDLE dropped around 8%.

SAND was one of the market’s few gainers, rising 9% over 24 hours to lead the CoinDesk 100. The token had also advanced 37% on Oct. 2. STX gained 4% and XMR added about 1%.