U.S. airstrikes in the Strait of Hormuz triggered a broad crypto selloff Wednesday, with bitcoin (BTC) dropping to its lowest level since April 13 and ether (ETH) slipping below $2,000 for the first time since March 29. The moves came as crude oil jumped to $96 per barrel from $92 before settling around $94 during European morning hours, stoking fresh inflation concerns across global markets.

Market Context

Risk-off sentiment swept through crypto markets following the geopolitical escalation in the Strait of Hormuz. Bitcoin is currently trading near $73,400, down roughly 1.2% since midnight UTC but above its daily low hit around 6:30 UTC. Ether shed 1.5% to trade below the psychological $2,000 level for the first time in two months. U.S. equity index futures also felt the pressure, with S&P 500 and Nasdaq 100 derivatives down 0.11% and 0.25%, respectively, reinforcing the broadly risk-off tone heading into the American trading session.

Analysis

The geopolitical shock disrupted what had been a relatively quiet period for crypto markets. Nearly $958 million in crypto positions were liquidated over the past 24 hours, with longs accounting for $897 million of that total versus just $61 million in shorts. The lopsided wipeout reflects a market grinding lower rather than a sharp two-way flush, as traders rapidly unwound leveraged long exposure following the oil price spike and renewed inflation fears.

Ether open interest climbed to a record 16.39 million ETH ($32.61 billion), up 0.61% over 24 hours, even as the token fell below $2,000. This divergence—rising OI alongside falling prices—typically signals traders are adding shorts in anticipation of further losses rather than buying the dip. XRP open interest fell 0.49% to 2.28 billion XRP ($2.94 billion) while its price softened, a simultaneous decline that reads as bullish bets closing out rather than new shorts opening.

Perpetual funding on XRP and SOL turned negative across nearly every venue, with shorts paying longs on Binance at -0.0123% and -0.0161%, respectively—Gate the lone positive outlier. The widespread negative funding confirms traders are leaning short across major altcoins as risk-off sentiment dominates.

Bitcoin's put-call skew remains elevated despite historically low headline volatility: +12.3% on the one-week and +10.3% on the one-month, meaning traders continue paying up for immediate downside protection even with Deribit's DVOL index near 36, at the eighth percentile of the past year. Ether volatility sits at its first percentile—the lowest since early 2024—yet skew stays elevated, suggesting markets remain fragile under the surface despite compressed realized moves.

Meanwhile, CME bitcoin open interest dropped 9.85% to $7.56 billion even as offshore perpetual OI held steady and funding stayed neutral at 0.0058%. Institutional players are stepping back from regulated futures while retail-oriented offshore venues continue positioning, a divergence that could matter for price discovery if the geopolitical situation escalates further.

Key Numbers

- $958 million: Total crypto liquidations in 24 hours

- $897 million: Long positions liquidated versus just $61 million in shorts

- $73,400: Bitcoin's approximate trading level after falling to lowest since April 13

- $2,000: Ether support broken for first time since March 29

- 16.39M ETH ($32.61B): Ether open interest at record high

- +12.3%: One-week bitcoin put-call skew, elevated despite low DVOL

- $8 billion: Options expiring on Deribit Friday (BTC max pain at $75,000)

What to Watch

The immediate catalyst for further crypto weakness is oil price action—if crude re-tests the $96 handle or breaks higher, inflation expectations could tighten further and pressure risk assets. Traders will monitor whether ether open interest continues climbing as prices fall, which would confirm aggressive short accumulation ahead of anticipated losses.

Around $8 billion in options expire on Deribit Friday with bitcoin's max pain at $75,000—just above current spot price—plus $375 million in put notional clustered at that strike and $640 million in open interest stacked at the $80,000 resistance level that marks the 200-day moving average. The large concentration of positions near these strikes could amplify volatility around expiry settlement.

CME's new round-the-clock bitcoin futures trading eliminates weekend gaps but liquidity remains concentrated in ETF options and offshore perpetuals, with IBIT options open interest far exceeding CME crypto markets—a structural dynamic worth watching for institutional flows if the geopolitical situation stabilizes.