Bitcoin declines to $70,000 as rising oil prices and Federal Reserve hold impact risk assets.

BTC fell below $70,000 as energy costs surged and the Fed maintained interest rates, exerting pressure on both crypto and stock markets.

Bitcoin declines as oil prices increase (Maria Lupan/Unsplash)

Key points:

• Bitcoin and ether experienced declines on Thursday, reflecting a broader risk-averse sentiment, following the Fed’s decision to maintain interest rates and bolster the U.S. dollar.
• Energy markets surged amid escalating tensions with Iran, with spikes in oil and gas prices contributing to macroeconomic pressures on crypto.
• Altcoins lagged due to low liquidity; however, a few tokens, such as NEO and ETHFI, saw gains.

Bitcoin BTC$70,150.74 sustained additional losses on Thursday after being impacted by rising energy prices, with Brent crude oil climbing to $114 and Oman crude reaching $150.

European natural gas futures followed suit, increasing approximately 25% to over $78 per MWh on Thursday as Iran struck critical Gulf energy infrastructure following an Israeli attack on its South Pars gas field.

Bitcoin traded close to $70,000, having decreased by 1.6% since midnight UTC, while ether (ETH) fell by 1.7% to $2,160.

The Federal Reserve also played a role after it decided to keep rates unchanged in the 3.50%–3.75% range on Wednesday, pausing a cycle of rate cuts to strengthen the U.S. dollar.

As a consequence, risk assets declined broadly, with Nasdaq 100 futures dropping by about 0.3% since midnight UTC.

Derivatives positioning

• Nearly $600 million in leveraged crypto futures positions have been liquidated by trading platforms within 24 hours, predominantly affecting long or bullish bets. The overnight price decline evidently surprised bullish traders.
• Across the industry, futures open interest (OI) has decreased by 5.6% to $106.90.
• Ether futures OI fell by 9% as the token’s spot price declined by 6%, indicating capital outflows.
• Futures linked to tether gold (XAUT) and privacy-oriented ZEC experienced double-digit declines, reflecting investor risk aversion.
• Demand for bearish short positions has risen again, as indicated by negative funding rates for BTC, ETH, BNB, SOL, and other tokens. The 24-hour cumulative volume delta for most of these cryptocurrencies is negative, highlighting this trend.
• Market fear has returned. Volmex’s BVIV, which gauges the 30-day implied or anticipated price volatility in bitcoin, has increased over 5% to 58.36%, marking the end of a week-long decline. The same trend is observed for ether.
• On Deribit, the put skews for bitcoin and ether have strengthened, further signifying increased downside concerns.
• Block flows showed a significant demand for ether straddles, a volatility strategy. In the case of BTC, traders pursued risk reversals and put spreads.

Token talk

• Several altcoins faced significant downward movements on Thursday, particularly bittensor (TAO) and hyperliquid (HYPE), which dropped 8.8% and 6.5%, respectively, since midnight.
• This trend in the altcoin market can be attributed to a lack of liquidity in a sector that remains fragmented following a $19 billion leverage liquidation in October.
• A few tokens demonstrated resilience despite the overall market downturn. NEO increased by 4.2%, and restaking token ETHFI continued its positive trend this year, gaining 1.5% to $0.55.
• The CoinDesk 20 (CD20) index has decreased by about 1% since midnight, while the DeFi Select Index (DFX) and CoinDesk Memecoin Index (CDMEME) are down by 1.4% and 2%, respectively.