You can do either, but let's look at why we are oxidizing it:
There needs to be a carbon layer where the coil will contact it, so the top is a must.
There needs to be a carbon layer where the wick touches the
tank at the wick hole.
The wick must not short at the bottom of the
tank. So the bottom of the wick must be oxidized, or you must make sure that you don't place the wick all the way down and touching the bottom.
How much of your wick gets oxidized is up to you as long as you know these things and cover them. Oxidizing the whole wick is just easy, and if done properly your wick can sit on the bottom of the
tank with no shorting issues.