Bitcoin slipped further below $83,000 as traders assessed a warning from Ethereum Foundation researcher Justin Drake about the potential for artificial intelligence to threaten the cryptography used to secure crypto wallets.
BTC fell to around $82,300 during Asian hours before recovering to roughly $82,800. It remained about 4% below Tuesday’s high near $86,600, while the CoinDesk 100 declined nearly 2% over 24 hours.
Drake called on the crypto industry to begin preparing for “bunker mode” in an X post that has attracted almost 4 million views.
The approach would involve gradually moving cryptocurrency holdings to new addresses whose public keys have never been exposed. Drake argued that rapid progress in AI-assisted mathematics makes it prudent to prepare for the possibility that the elliptic-curve signatures protecting bitcoin and ether wallets could be compromised in “months not years.”
He pointed to 722 mathematical results released by OpenAI this week as an indication of accelerating capabilities.
The warning produced a mixed response. Ethereum co-founder Vitalik Buterin said AI-driven advances in mathematics could pose a serious threat and should be monitored, but advised users not to rush into moving their funds.
Samson Mow, CEO of bitcoin technology firm Jan3, took a more skeptical view and told followers there was no reason to panic “because an Ethereum researcher is saying silly things.”
Treasury Market Keeps Pressure on Risk Assets
Bond-market pressure remained elevated alongside the crypto decline. The 30-year Treasury yield rose 4 basis points to 5.71%, while the 10-year yield reached 5.32%, CNBC reported.
The moves came before a $22 billion 30-year Treasury auction scheduled for later Thursday.
Minutes from the Federal Reserve’s September meeting showed unanimous support among all 19 officials for the rate increase delivered last month. Most policymakers also indicated that another increase by year-end could be appropriate.
The Sept. 14 consumer price index report, due Oct. 14, will be the last major inflation reading ahead of the Fed’s Oct. 28 meeting.
Futures Market Shows Reduced Leverage
Shorts maintain the upper hand: The 24-hour taker long/short ratio was 48% long and 52% short, broadly unchanged from the previous session. Crypto futures open interest declined 1% to $150 billion, while trading volume remained near $187 billion. Liquidations eased to $400 million from $548 million a day earlier. Sellers remain ahead, although forced selling has moderated.
Major assets show deleveraging: Notional open interest in BTC, ETH, HYPE, XRP and DOGE has fallen by amounts at least as large as their spot-price declines. This suggests traders are reducing exposure or closing positions rather than rapidly opening new shorts during the selloff.
NEAR draws fresh capital: NEAR rose 4% over 24 hours and its notional open interest climbed 11% to $1.70 billion. Slightly negative funding suggests shorts are paying to maintain positions, while its 24-hour OI-adjusted cumulative volume delta was the most positive among major tokens, indicating aggressive buying. Continued gains could put short sellers under pressure to cover.
SOL points to increasing short interest: Solana’s notional open interest increased 1.5% even as SOL declined 2%, a combination that typically signals fresh short positioning.
Selling remains widespread: The 24-hour cumulative volume delta was negative for most major cryptocurrencies, including BTC and ETH. NEAR and SUI were the exceptions, indicating continued market selling into bids.
Bitcoin volatility moves higher: BVIV, bitcoin’s 30-day implied volatility index, rose 5% from its yearly lows. The increase points to renewed demand for options protection, although the index remains within its recent range. Some analysts have warned that subdued volatility in crypto and equities could fade as volatility in the bond market increases.
Options positioning turns defensive: Bitcoin’s one-week put-call skew rose to 10%, while one- and two-month skews were slightly positive. The data points to increased demand for puts and downside protection compared with the previous day’s largely neutral readings. Ether options showed a similar shift. Bitcoin and ether calls remained among Deribit’s five most-traded contracts over the past 24 hours.
DeFi and Quantum-Related Tokens Diverge
Solana DeFi tokens recovered from Wednesday’s declines despite SOL remaining about 1% lower since midnight UTC.
Jupiter’s JUP gained 15% over 24 hours, while Raydium’s RAY and Jito’s JTO rose 14% and 10%, respectively. Jito and Jupiter had previously fallen 6% to 8% in the prior 24-hour period.
Some tokens associated with networks emphasizing quantum-resistant cryptography also gained after Drake’s post.
Algorand’s ALGO led the CoinDesk 100 with a 9% gain since midnight. Algorand uses post-quantum Falcon signatures for state proofs. Starknet’s STRK, which uses hash-based cryptography for its proofs, rose 4%.
Privacy tokens weakened. Zcash fell 6% over 24 hours to around $1,240, while Cardano-linked privacy token Midnight’s NIGHT dropped 8%. Monero was relatively stable, gaining about 0.5% since midnight.
Curve’s CRV advanced 11% over 24 hours, while Ethena’s ENA dropped 7%, leaving the DeFi sector without a clear direction or bullish catalyst.
AI-related tokens remained under pressure. Bittensor’s TAO declined 6% over 24 hours, Venice’s VVV fell 7%, and Grass also lost 7%.
