During the early Asian hours, Bitcoin’s short-term options market experienced a significant shift as traders rushed to buy downside protection amid rising tensions in the Middle East, which sent oil prices soaring. The seven-day options skew, a key indicator comparing the relative value of BTC calls to puts listed on Deribit, plummeted to -3.84%, marking its lowest point since April 16. This negative skew indicates that put options—used for downside hedging—became the most expensive relative to calls in over three months, with demand for downside protection also pulling the 30-day and 60-day skews into negative territory.
Traders often buy put options to hedge their long positions in spot or futures markets or to profit from expected declines. Bitcoin’s price recently dipped to its 50-day simple moving average (SMA) at approximately $103,150, reflecting a 24-hour loss of about 4.59%. Earlier this week, BTC briefly surpassed the $110,000 mark, but the recent sell-off suggests caution among bulls who are watching to see if the 50-day SMA holds. A break below this level could trigger additional selling, reminiscent of the February breakdown when support failed.
Meanwhile, oil prices surged over 6%, with WTI crude hitting $74.30 per barrel—the highest since early February—and extending weekly gains to 13%. The jump came after Israel carried out airstrikes on Iran, allegedly prompting retaliatory missile exchanges from Tehran. Such abrupt spikes in oil prices tend to fuel inflationary pressures worldwide, complicating economic outlooks especially as geopolitical tensions threaten to disrupt trade flows.
This sudden increase in oil prices adds to inflation risks, potentially dampening expectations for Federal Reserve rate cuts and increasing volatility across stocks and cryptocurrencies. Currently, futures tied to the S&P 500 are down about 1.5%, reflecting broader market jitters amid these geopolitical and macroeconomic uncertainties.
