Bitcoin Plunges After ByBit Hack, S&P 500 Crash Sparks Market Jitters

Bitcoin's (BTC) price experienced a brief setback on Friday, February 21, 2025, following a hack on the ByBit exchange. This event, coupled with the S&P 500's worst day of the year and options data, has raised concerns about a potential crash in Bitcoin's price.

The S&P 500 index saw over $900 billion in market capitalization wiped out on the same day, while Deribit's short-term BTC skew (1-week) dropped into bearish territory. This metric, which measures the demand for call and put options, has historically preceded Bitcoin price crashes. In December 2024, for instance, Bitcoin's price fell from above $98,000 to below $95,000 within 24 hours after this metric flipped negative.

The decline in the short-dated skew indicates that investors are buying put options, suggesting a bearish sentiment. Traders typically buy put options when they expect the price to fall and want to hedge against downside risk. The increase in the skew's negative value further highlights the strong bearish sentiment, as traders are willing to pay a premium to protect themselves against a downtrend.

The bearish outlook for Bitcoin coincides with reduced demand for risk assets following the S&P 500's worst single-day performance of 2025. 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 in the S&P 500 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. Inflation fears have also reduced demand for risk assets like Bitcoin, as depicted by the Coinbase Premium Index, which 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. Bitcoin price is currently in a bearish momentum, with the Relative Strength Index (RSI) line oscillating in a range below 5