Investors are worried about a crash for Bitcoin’s price. A strong derating of the S&P 500, a major US stock market index, resulted in its worst day of the year in the crypto market. Along with the signs of weakness in Bitcoin’s options market, this drop has caused traders to be nervous.
Why are Investors Worried?
After a hack of ByBit, considered a leading crypto exchange, Bitcoin’s price briefly dropped. Meanwhile, a crucial Bitcoin metric called Deribit short term skew went negative. This has the consequence that more traders are buying what is called “put options,” which means the traders can sell Bitcoin at a given price later. When investors believe that Bitcoin’s price will fall, they do this.
This is not the first time it has happened. In December of 2024, Bitcoin boiled over from $98,000 to under $95,000 in large part due to this same metric being negative. With S&P 500’s recent $900bn wipeout, risk assets including Bitcoin are in more pressure now.
The S&P 500’s Influence on Bitcoin
Traders are cautious as Bitcoin tends to follow the stock market and the recent crash of the S&P 500 index has had an impact. The University of Michigan reported that in February, U.S. consumer confidence slipped 10%. That means people are spending less of their money and thereby slowing down economic growth. However, as investors are worried about inflation creep, they are moving out of Bitcoin, the riskiest of asset classes.
Key Price Levels to Watch
At this present moment, Bitcoin is oscillating within the price range of $93,000 to $98,000 but experts caution that if Bitcoin falls below $92,500, then there will be panic selling. This meaning comes about because it determines the price of Bitcoin on the average of short term holders. If Bitcoin goes below this, many recent buyers will be underwater and could fuel a bigger sell off.
But, if Bitcoin cannot stay above $92,500 and takes a turn downward, it may weaken in strength and could be on its way to revert to $92,000 or even hit the $90,000 mark.
Bitcoin is at a critical point, as such. However, at the same time, if the buying pressure dies down then we may be in for another crash. In the coming days, traders should keep a close look on key levels and market trends.
Also read: Bitcoin Set to Skyrocket: Analysts Predict $300K Target with Bullish Patterns in Play
