Is Bitcoin Price at Risk of Crash as Short-Dated Skew Drops Amid S&P 500 Plunge?

others

Is Bitcoin Price at Risk of Crash as Short-Dated Skew Drops Amid S&P 500 Plunge? – Crypto News

Published

1 day ago

February 22, 2025

Dripp

Bitcoin (BTC) price suffered a brief setback on Friday due to the ByBit hack. This sudden setback, coupled with the S&P 500’s worst day in 2025 and options data, suggests that BTC price could be at risk of another crash.

On February 21, 2025, more than $900 billion worth of positions were wiped from the US stock market’s S&P 500 index. At the same time, Deribit’s short-term BTC skew (1-week), a metric that measures the demand for call and put options, dropped into the bearish territory. With the crypto market reeling from the recent hack and emerging bearish signals, how low can Bitcoin price crash?

Bitcoin Deribit Skew Drops – Is BTC Price at Risk of a Crash?

The BTC Deribit’s Skew flipped negative yesterday, indicating investors are buying put options. Traders buy put options when they expect the price to fall and want to hedge against downside risk. Therefore, the recent decline in this metric shows that investors anticipate a BTC price drop soon.

The increase in the skew’s negative value further shows that traders are willing to pay a premium to protect themselves against a downtrend. This highlights a strong bearish sentiment.

A decline in this short-dated skew has often preceded a BTC price crash. For instance, in December 2024, Bitcoin price fell from above $98,000 to below $95,000 within 24 hours after this metric flipped negative.

This bearish outlook for Bitcoin (BTC) coincides with reduced demand for risk assets after the S&P 500 saw its worst single-day performance of 2025.

S&P 500 Plunges as Demand for Risk Assets Fades

The S&P 500 index plunged on Friday, leading to $900 billion in market capitalization being erased. This crash has caused jitters among Bitcoin holders due to the asset’s growing correlation with the US stock market.

The decline followed the release of a survey by the University of Michigan revealing that US consumer sentiment dropped a staggering 10% in February. This drop shows economic uncertainty that could slow down spending and economic growth.

This report, coupled with inflation fears has reduced demand for risk assets like Bitcoin as depicted by the Coinbase Premium Index. This metric has fallen to a one-month low, showing weaker demand for BTC in the US amid rising selling pressure.

Due to these bearish signals, the near-term Bitcoin price forecast shows a possible crash if there is no shift in buying activity or triggers to aid recovery.

Is a Bitcoin Price Crash Looming? Key Levels to Watch

Bitcoin price is in a bearish momentum following a drop of the Relative Strength Index (RSI) line to 45. The RSI line has been oscillating in a range below 50 for nearly three weeks, showing lack of buying pressure.

Traders should watch out for the key resistance level at $92,600. BTC has defended this support level since December, with a swing below it set to cause a bearish leg.

On the other hand, the key resistance level lies at $98,330. BTC flipped this resistance yesterday before market panic from the Bybit hack and the S&P 500 crash halted the rally. Flipping this support is crucial for Bitcoin to break the $100,000 psychological level.