Cryptocurrency declines as oil prices rise and economic uncertainties prompt derivatives liquidation.

Bitcoin fell below $70,000 and ether approached $2,000 as increasing oil prices, declining equities, and weak liquidity prompted risk-averse movements, putting pressure on altcoins.

Crypto market turns bearish (Photo by Sean Benesh on Unsplash/Modified by CoinDesk)

What to know:

• Oil prices rose back above $100, and declining equities and gold indicated risk aversion, impacting both major cryptocurrencies and altcoins.
• Futures open interest decreased by 3.5% to $108 billion, funding rates became negative, and traders increased short positions as BTC fell below $70,000.
• AI and DeFi tokens experienced significant losses amid low liquidity, which could heighten the risk of further declines despite a neutral altcoin index.

The cryptocurrency market is experiencing a downturn following an overnight selloff, with bitcoin BTC$69,530.33 trading at $69,400, reflecting a 2.6% decline since midnight UTC, while ether (ETH) is moving back toward $2,000 after a 4.1% drop.

The downturn coincides with a notable decline in U.S. equities and precious metals, with Nasdaq 100 futures falling approximately 1% and gold decreasing by 1.8%.

Oil prices surged back above $100 per barrel amid stalled peace discussions between the U.S. and Iran.

The altcoin market was particularly affected, with the CoinDesk Computing Select Index (CPUS) and the CoinDesk DeFi Select Index (DFX) dropping by 4.3% and 3.9%, respectively, during the Asia session.

When looking at the bigger picture, bitcoin and the overall cryptocurrency market remain confined within a price range that has existed since early February, despite several attempts to break out upward.

Derivatives positioning

• Stalled negotiations between Iran and the U.S. appear to have reignited risk aversion, resulting in capital outflows from crypto derivatives. The total crypto futures open interest (OI) has fallen by 3.5% to $108.30 billion.
• OI in PAXG plummeted nearly 11% within 24 hours, as the gold price decreased by 1.8% to $4,423 per ounce. DOGE, ZEC, and TAO are also significant OI decliners.
• Some traders may have shorted BTC futures on major exchanges as prices dipped below $70,000 during European trading hours, evident from a slight increase in OI on major dollar- and USDT-denominated exchanges from 229K BTC to 232K BTC.
• ETH, BNB, XPR, SOL, TRX, and DOGE are experiencing negative funding rates, indicating a growing preference for bearish, short positions.
• Conversely, CC, TRX, and BCH are notable for their positive cumulative volume deltas, suggesting positive positioning, while other major cryptocurrencies like BTC show seller dominance.
• In the options market, some traders are seeking downside protection for ether by acquiring risk reversals, a strategy involving selling calls to finance put option purchases, according to TDX Strategies in a market update.
• On Deribit, BTC and ETH puts are more costly than calls across all maturities. At the front end, ether puts are more expensive than those for BTC, indicating traders anticipate greater downside for ether in the short run.

Token talk

• The cryptocurrency market is predominantly in the red on Thursday, although certain tokens performed worse than others; AI-focused FET has decreased by 7.7%, while ETHFI and RENDER have retraced much of their gains from the past week, declining by 6.3% and 5.9%, respectively.
• The “Altcoin Season” index remains at 48/100, implying a potential bullish recovery could occur if the market finds support and stabilizes.
• Approximately six tokens from the top 100 have recorded gains over the past 24 hours, including ethena (ENA), which is up 2.2%, and layer-1 network tokens XDC, NIGHT, and TRX, all rising between 1% and 2%.
• Overall, significantly low liquidity that has not improved since late 2025, combined with the unpredictable behavior of crypto retail traders, could create an ideal environment for a drastic downturn across the altcoin market.