Bitcoin and ether dropped sharply Thursday as rising tensions in Iran pushed oil prices higher, with traders increasingly hedging for further downside rather than panic selling.

Market Overview
Bitcoin (BTC $67,326.52) fell to about $66,700, losing 2.4% since midnight UTC, while ether (ETH) tumbled 4.4%, reflecting broad risk-off sentiment across crypto markets.

The decline followed comments from U.S. President Donald Trump, who warned that military action in Iran would intensify: “Over the next two to three weeks, we’re going to bring them back to the stone ages where they belong.” Oil jumped roughly 10% to $108 per barrel. Nasdaq 100 futures fell 1.5%, S&P 500 futures dropped 1.1%, and the U.S. dollar rose 0.5% above 100 points.

Derivatives Activity
Futures and options data show traders are betting on further declines rather than panicking. BTC open interest rose slightly, while perpetual funding rates hit their lowest since March 12. Ether funding rates are at their lowest since October 2025. Solana (SOL) showed measured selling, while Zcash (ZEC) and ADA saw falling open interest, signaling capital outflows.

Around $400 million in futures positions were liquidated—a 17% increase from the prior day. Despite the volatility, BTC and ETH 30-day implied volatility remained stable, indicating orderly selling. Traders continued to favor put options and volatility strategies, including ether straddles, put spreads, and BTC call spreads.

Token Performance
DeFi tokens led the declines: CoinDesk’s DFX index fell 5.9%, CPUS dropped 5%, and Ethena (ENA) plunged over 10%. UNI, LDO, SKY, and AAVE fell between 4.2% and 6.5%. Algorand (ALGO) bucked the trend, gaining 0.8% after a 22% rally over the past week. CoinMarketCap’s altcoin season index dropped from 50/100 to 42/100 since March 30, highlighting broad sector weakness.