Bit Digital (BTBT) Plunges 1.29% Amid $135M Convertible Note Frenzy – What’s Next?

Summary
• Bit Digital’s $135M upsized convertible note offering triggers 8% pre-market selloff
• Ethereum holdings now exceed $532M, but shares trade 1.29% below $3.78 close
• Analysts debate valuation gap: $5.70 fair value vs. current $3.73 price

Bit Digital (BTBT) is in freefall after announcing a $135M convertible note offering, sending shares down 8% pre-market and extending today’s intraday range to $3.505–$3.98. The move has sparked fierce debate about the company’s Ethereum-driven growth strategy and its ability to justify a $5.70 analyst price target. With $532M in ETH holdings and a 30% premium conversion price, the offering underscores a high-stakes bet on crypto’s future.

Convertible Note Overhang Sparks 8% Share Price Drop
Bit Digital’s 8% pre-market plunge stems from its $135M upsized convertible note offering, priced at $4.16 per share—a 30% premium to its Sept. 29 close of $3.20. The offering, maturing in 2030, allows underwriters to purchase an additional $15M, diluting existing shareholders while funding further ETH purchases. Investors reacted negatively to the aggressive capital raise, fearing over-leveraging and reduced equity value. The move mirrors similar sell-offs in crypto miners like Cipher Mining (CIFR), which dropped 19% after a similar offering, signaling sector-wide caution.

Blockchain Sector Mixed as NVDA Holds Steady
The broader blockchain sector remains fragmented, with Bit Digital’s 8% drop contrasting against a 0.059% gain in sector leader Nvidia (NVDA). While crypto miners face pressure from capital-raising dilution, Ethereum-focused plays like Bit Digital are betting on staking yields and ETH price appreciation. However, the sector’s volatility—exacerbated by regulatory uncertainty and macroeconomic headwinds—leaves investors wary of overextended plays like BTBT.

Options Playbook: High-Leverage Calls and Volatility-Driven Bets
• MACD: 0.1645 (bullish divergence), RSI: 73.56 (overbought), 200D MA: $2.7577 (below price)
• Bollinger Bands: $3.59 (upper), $2.638 (lower)—price near 30D MA at $3.1165

Top Options Picks:
• BTBT20251017C3.5 (Call, $3.5 strike, Oct 17 expiry):
- IV: 113.82% (high volatility), Leverage: 8.89%, Delta: 0.6679 (moderate), Theta: -0.020062 (moderate decay), Turnover: $62,482
- Payoff (5% downside): $0.13/share. This call thrives on short-term volatility, with high gamma (0.491985) amplifying gains if BTBT rebounds.
• BTBT20251024C4 (Call, $4 strike, Oct 24 expiry):
- IV: 132.94% (elevated), Leverage: 15.56%, Delta: 0.4301 (balanced), Theta: -0.020583 (moderate decay), Turnover: $108,161
- Payoff (5% downside): -$0.27/share. This contract offers aggressive leverage but requires a sharp reversal to profit, ideal for high-risk traders.

Technical Setup: BTBT is testing critical support at $3.505 (intraday low) and $3.5 (key strike level). A break below $3.5 could trigger a test of the 200D MA at $2.7577. Conversely, a rebound above $3.98 (intraday high) may attract short-covering. Aggressive bulls may consider BTBT20251017C3.5 into a bounce above $3.5, while bears eye a breakdown below $3.5 for BTBT20251024P4 (Put, $4 strike).

Backtest Bit Digital Stock Performance
Key take-aways• Frequency: 347 qualifying “-1 % close-to-close plunge” days between January 2022 and 7 Oct 2025. • Short-term impact: the average next-day rebound is only +0.57 % and the win-rate is below 50 %, indicating no reliable “dead-cat bounce” effect. • Medium term: the cumulative 30-day excess return versus holding the stock continuously is just +1.40 ppts (+5.68 % vs +4.28 %), and the statistical tests show no significant edge. • Trading implication: a naïve buy-the-dip strategy triggered by a 1 % down day does not provide a statistically significant advantage on BTBT over the test window.You can inspect the full event-study visualization below.(The module will load an interactive report where you can drill down into win-rate curves, event chronology, and performance distributions.)

BTBT at Critical Juncture – Watch $3.5 Support and Ethereum Staking Momentum
Bit Digital’s 8% drop has created a pivotal inflection point. While the $135M convertible note offering funds ETH expansion, the immediate risk lies in further dilution and a breakdown below $3.5 support. Technically, the stock remains in a long-term bullish trend but faces near-term headwinds. Investors should monitor Ethereum staking yields and the $5.70 analyst price target as potential catalysts. For now, BTBT20251017C3.5 offers a high-leverage play on a rebound, while sector leader Nvidia (NVDA)’s 0.059% gain highlights the broader market’s cautious optimism. Watch for a $3.5 breakdown or a surge in ETH prices to dictate BTBT’s next move.