Bit Digital Plummets 7.2% Amid $135M Convertible Note Frenzy: Is This the Bottom?

Summary
• Bit Digital (BTBT) slumps 7.2% to $3.73, hitting a 52-week low of $3.73
• $135M upsized convertible note offering triggers 8% pre-market selloff
• Ethereum treasury now holds 150,244 ETH ($675M) post-funding
• Sector leader BitMine Immersion (BMNR) also plunges 10.9%

Bit Digital’s shares have cratered to a 52-week low amid a $135 million convertible note offering that triggered immediate shareholder panic. The stock’s 7.2% intraday drop—despite a bullish technical setup—highlights the tension between corporate financing moves and market sentiment. With Ethereum holdings now valued at $675 million, the company’s strategic shift to pure-play ETH treasury management has collided with short-term capital dilution fears.

Convertible Note Overhang Crushes Shareholder Sentiment
The 8% pre-market selloff was directly triggered by Bit Digital’s upsized $135 million convertible note offering, priced at $4.16 per share—a 30% premium to its Sept. 29 close. This 34% increase in the original $100 million offering signals aggressive capital raising to expand its Ethereum treasury, but the conversion mechanism creates immediate downward pressure on BTBT. The $4.16 conversion price represents a 35% discount to the 52-week high of $5.74, effectively devaluing existing shareholders’ stakes. The move mirrors a similar sell-off in Cipher Mining (CIFR) after its convertible offering, where shares fell 19% in two days.

Blockchain Sector in Turmoil: BMNR’s 10.9% Drop Outpaces BTBT’s 7.2%
The Blockchain sector is under broad pressure, with BitMine Immersion (BMNR) leading the selloff at -10.9%. While BTBT’s decline is tied to its specific financing structure, BMNR’s drop reflects broader market jitters over Ethereum’s technical resistance at $4,800. Both stocks face similar challenges: capital-raising dilution and Ethereum’s role as a corporate reserve asset. However, BTBT’s 30% premium conversion price creates a more immediate overhang than BMNR’s organic price action.

Options Playbook: Capitalizing on Volatility Amid Technical Breakdown
• 200-day average: 2.76 (below) • RSI: 73.2 (overbought) • MACD: 0.259 (bullish) • Bollinger Bands: 3.995 (upper), 3.272 (middle) • Support/Resistance: 2.948–2.9792 (30D), 2.9312–2.9774 (200D)

BTBT’s technicals show a short-term bullish trend but are now invalidated by the sharp intraday drop. Key levels to watch: 3.5 (psychological support) and 2.948 (30D support). The 73.2 RSI suggests overbought conditions, but the 7.2% drop has created a potential short-term rebound opportunity. No leveraged ETF data is available for direct correlation.

Top Options Plays

• BTBT20251017C4 (Call, $4 strike, Oct 17):
  • IV: 128.02% (high volatility)
  • Leverage: 18.93% (moderate)
  • Delt: 0.423887 (moderate sensitivity)
  • Theta: -0.024828 (moderate time decay)
  • Gamma: 0.545978 (high sensitivity to price movement)
  • Turnover: $266,167 (high liquidity)
This call option offers high gamma and moderate delta, ideal for a short-term rebound trade. A 5% downside scenario (to $3.54) would yield a 16% payoff (max(0, 3.54 - 4) = 0), but the high gamma makes it responsive to volatility spikes.
• BTBT20251031C3.5 (Call, $3.5 strike, Oct 31):
  • IV: 114.48% (high volatility)
  • Leverage: 6.64% (low)
  • Delt: 0.665653 (high sensitivity)
  • Theta: -0.012470 (moderate time decay)
  • Gamma: 0.342210 (moderate sensitivity)
  • Turnover: $88,267 (high liquidity)
This call offers a lower strike price and higher delta for a more aggressive play. A 5% downside to $3.54 would yield a 14% payoff (max(0, 3.54 - 3.5) = 0.04), but the high delta makes it ideal for a bounce above $3.5.

Trading Insight: Aggressive bulls should consider BTBT20251031C3.5 into a bounce above $3.5, while BTBT20251017C4 offers short-term volatility capture. Both contracts benefit from high gamma and liquidity, but the $3.5 strike provides a better risk-reward profile.

Backtest Bit Digital Stock Performance
Below is an interactive event-backtest panel summarising BTBT’s performance after every ≥7 % one-day drop since 2022. Scroll the panel for the full statistics and equity-curve visualisation.Key take-aways (30-day event window):• Events analysed : 106 • Average return vs. benchmark (BTBT close-to-close) – 10 trading days after event : +3.8 % (benchmark +1.5 %) – 20 trading days after event : +5.9 % (benchmark +2.9 %) – None of the excess returns reached statistical significance at the 95 % level. • Win-rate oscillates around 48 – 56 % through day 30, modestly above random but likewise not significant. • Overall, BTBT tends to bounce modestly after sharp one-day sell-offs, yet the edge is weak and inconsistent.Parameter notes (auto-filled):1. Price series: daily close (default when user omits price type). 2. Event rule: day-to-day close change ≤ –7 %. 3. Analysis window: ±30 days around event (standard module default). Feel free to explore the panel for deeper drill-down or let me know if you’d like a different window, alternative metrics, or risk-managed signal testing.

Bottom Fishing or Further Downtrend? Key Levels to Watch Now
The 7.2% drop has created a critical inflection point for BTBT, with 3.5 acting as a near-term floor and 2.948 as a deeper support. While the Ethereum treasury strategy remains bullish long-term, the convertible note overhang and sector weakness (BMNR -10.9%) suggest caution. Investors should monitor the 3.5 level for a potential rebound or a breakdown to 2.948. A close below 3.5 would validate a bearish scenario, making BTBT20251031C3.5 a high-gamma play for volatility traders. Aggressive bulls may consider BTBT20251017C4 for a short-term bounce, but only if the 3.5 level holds.