Bitcoin dropped below $83,000 as the crypto market reacted to Ethereum Foundation researcher Justin Drake’s warning that advances in artificial intelligence could eventually undermine the cryptographic systems protecting bitcoin and ether wallets.

BTC touched roughly $82,300 during Asian trading before recovering to around $82,800. The move left bitcoin about 4% below Tuesday’s peak near $86,600, while the CoinDesk 100 index fell close to 2% over the previous 24 hours.

Drake urged the crypto industry to prepare for what he called “bunker mode” in an X post that has received almost 4 million views.

His recommendation is to gradually move funds into fresh addresses whose public keys have never been exposed on the blockchain. Drake argued that accelerating AI advances in mathematics make it reasonable to prepare for the possibility that the elliptic-curve signatures securing BTC and ETH could be broken within “months not years.”

He referenced 722 mathematical results released by OpenAI this week as an example of the pace of progress in AI-assisted mathematical research.

The warning has divided opinion among crypto figures. Ethereum co-founder Vitalik Buterin said the potential threat from AI-driven mathematical advances deserves serious attention, but cautioned holders against rushing into large-scale fund migrations.

Jan3 CEO Samson Mow dismissed the urgency, saying there was no need to panic simply “because an Ethereum researcher is saying silly things.”

Bond Yields Add to Market Pressure

The crypto pullback coincided with continued strength in Treasury yields. The 30-year Treasury yield climbed 4 basis points to 5.71%, while the 10-year yield rose to 5.32%, according to CNBC.

The moves came ahead of a $22 billion auction of 30-year Treasury debt scheduled for Thursday.

Minutes from the Federal Reserve’s September meeting showed that all 19 policymakers supported the rate hike delivered last month. Most officials also viewed another rate increase before the end of the year as potentially appropriate.

The next major inflation test comes Oct. 14, when September CPI data is due. It will be the final inflation report before the Fed’s Oct. 28 policy decision.

Crypto Derivatives Show Cautious Positioning

The derivatives market continued to show a modest advantage for sellers. The 24-hour taker long/short ratio stood at 48% long versus 52% short, little changed from the previous session.

Futures open interest fell 1% to $150 billion, while trading volume held near $187 billion. Liquidations declined to about $400 million from $548 million a day earlier.

Open interest in BTC, ETH, HYPE, XRP and DOGE declined by as much as or more than their respective spot prices. That pattern points more toward traders cutting leverage and closing positions than aggressively building new shorts.

NEAR was a notable exception. The token gained 4% over 24 hours while its notional open interest rose 11% to $1.70 billion. Funding was slightly negative, while its OI-adjusted 24-hour cumulative volume delta was the strongest among major tokens. The combination suggests fresh buying and leaves short sellers vulnerable to a squeeze if NEAR continues higher.

SOL showed the opposite setup. Its notional open interest increased 1.5% while the token fell 2%, a combination that typically indicates fresh short positions.

Cumulative volume delta remained negative across most major cryptocurrencies, including bitcoin and ether, showing that sellers were continuing to hit bids. NEAR and SUI were the main exceptions.

Bitcoin’s 30-day implied volatility gauge, BVIV, rose 5% from yearly lows as demand for downside protection increased. Even so, volatility remained within its recent range. Some market observers have warned that the relatively calm conditions in crypto and equities may not last if bond-market volatility continues rising.

Options positioning also became more defensive. Bitcoin’s one-week put-call skew reached 10%, while one- and two-month skews turned slightly positive. Ether showed a similar pattern. Calls on both BTC and ETH remained among Deribit’s five most-traded contracts over the previous 24 hours.

Solana DeFi Tokens Rebound

Solana-based DeFi tokens recovered after Wednesday’s selloff, even though SOL remained about 1% lower since midnight UTC.

JUP rose 15% over 24 hours, while RAY and JTO gained 14% and 10%, respectively. The three tokens had previously suffered declines of roughly 6% to 8% during the preceding session.

Tokens connected with quantum-resistant cryptography also benefited from renewed attention to security risks.

ALGO rose 9% since midnight, leading the CoinDesk 100. Algorand uses post-quantum Falcon signatures for state proofs. Starknet’s STRK, whose proof system relies on hash-based cryptography, gained 4%.

Privacy-focused assets moved lower. Zcash dropped 6% over 24 hours to about $1,240, while Midnight’s NIGHT declined 8%. Monero was slightly stronger, rising about 0.5% since midnight.

DeFi remained mixed, with CRV climbing 11% over 24 hours while ENA fell 7%.

AI-related tokens also remained under pressure. TAO declined 6%, while VVV and GRASS each lost about 7% over 24 hours.