The cryptocurrency markets navigated a tense yet telling week between February 17 and 24, marked by subtle shifts in sentiment, macroeconomic crosscurrents, and a sudden security scare that briefly rattled investor confidence. Bitcoin (BTC) ended the week down 0.3%, slipping from $96,150 to $95,900, while Ethereum (ETH) managed a modest 1.3% gain, rising from $2,690 to $2,725. Despite these relatively narrow price movements, the underlying dynamics reveal a market at an inflection point—one balancing between consolidation and potential breakout.
Market Structure: Testing Key Resistance Amid Volatility
After a period of subdued volatility, spot markets successfully absorbed selling pressure near the upper boundary of the prevailing price channel. By Friday, BTC had begun testing the critical $99,000–$100,000 resistance zone—a psychological and technical threshold that has repeatedly shaped market behavior in recent months.
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However, just as momentum appeared to build, news broke that Bybit suffered a major security breach involving approximately $1.5 billion worth of ETH. The incident triggered a wave of margin withdrawals and forced liquidations across leveraged positions, particularly on centralized exchanges. This cascade briefly pushed BTC down toward the $95,000 support level.
Notably, the market held firm at this level and gradually recovered, re-entering the prior trading range. This resilience suggests strong underlying demand around $95,000. Looking ahead, the next few trading sessions will be decisive:
- If BTC regains and sustains above $99,000, it could re-enter its established upward trend channel and set up for another serious attempt at breaking $100,000.
- Conversely, failure to reclaim the upper range may lead to further consolidation or even a downward correction.
- A decisive break below $95,000 could open the door to testing lower supports at $93,000 and ultimately the long-held $90,000–$91,000 zone.
- Should that foundational range fail, extended downside correction becomes increasingly likely.
Macroeconomic Backdrop: Calm with Underlying Tensions
Macro markets experienced a quiet week overall—until Friday. U.S. economic data revealed weaker-than-expected growth figures, while inflation expectations remained stubbornly elevated. These conditions reignited concerns about stagflation—a scenario where stagnant growth meets persistent inflation.
As a result:
- U.S. equities declined.
- Bond yields dropped as investors flocked to traditional safe-haven assets.
Yet despite this late-week turbulence, the broader macro environment remains stable. Short-term fluctuations appear exaggerated in the context of historically low volatility across asset classes. This macro stability continues to provide a supportive backdrop for risk assets like cryptocurrencies—though not without periodic stress tests.
In the crypto space itself, narrative momentum has been lacking. Altcoins have shown particular weakness, reflecting diminished speculative appetite. However, midweek optimism emerged when MicroStrategy (MSTR) announced plans to raise capital for additional Bitcoin purchases—a move that briefly boosted sentiment and propelled BTC toward $100,000.
That momentum was short-lived. The Bybit hack announcement overshadowed positive developments and reminded investors of the sector’s operational risks. ETH’s subsequent 6% weekly decline underscores how quickly sentiment can shift in response to exchange-specific shocks—even when network fundamentals remain intact.
Implied Volatility: At Multi-Month Lows
One of the most striking features of this week’s market structure is the continued compression in implied volatility (IV), especially for options expiring between February and March.
Key observations:
- Theta decay has accelerated as expiration dates approach.
- The steepness of the volatility term structure has flattened further.
- IV for at-the-money (ATM) options now sits around 35–36%, with realized volatility consistently in the low-to-mid 30s.
- This represents the lowest sustained volatility levels since October 2024—just before the U.S. presidential election.
With BTC price action confined to a narrow $94,000–$99,000 range, there is little catalyst for a sharp rise in realized volatility. As long as this range holds, downward pressure on near-term IV is likely to persist.
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The term structure continues to reflect a preference for harvesting premium in longer-dated options—particularly those expiring in June and beyond. Traders appear willing to sell gamma exposure in distant maturities due to reduced fear of black-swan events. However, unless there’s a significant shift in macro or regulatory expectations, the curve is expected to remain steep for now.
Skew and Kurtosis: Risk Perception Shifts After Security Breach
The Bybit hack had an immediate impact on options skew, particularly in short-dated contracts.
- Short-term skew dropped sharply following the news, reflecting increased demand for downside protection.
- Despite BTC not suffering a major price collapse, skew is likely to remain elevated near-term as traders reassess counterparty risk.
- Long-end skew, however, remains moderately positive—driven by tail-risk concerns around potential U.S. government accumulation or regulatory crackdowns.
- Kurtosis (a measure of tail risk and jump probability) has been relatively muted beyond the front week.
- There was a brief spike in call-side pricing immediately after the hack—a sign of panic buying—but it quickly faded.
These derivatives signals suggest that while short-term fears spiked, structural confidence in BTC’s long-term trajectory remains intact.
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Frequently Asked Questions (FAQ)
Q: What caused the drop in Bitcoin price on Friday?
A: The decline followed news of a major security breach at Bybit involving $1.5 billion in ETH. This led to widespread margin calls and liquidations, temporarily weakening market sentiment.
Q: Is $95,000 a strong support level for BTC?
A: Yes. The fact that BTC rebounded after briefly touching $95,000 suggests strong buying interest at this level. It remains a key near-term support zone.
Q: Why is implied volatility so low despite market news?
A: Although headlines can spike fear temporarily, BTC’s price has remained range-bound between $94K and $99K. Low realized volatility suppresses implied volatility, especially as options approach expiration.
Q: Could Bitcoin still reach $100,000 this month?
A: It’s possible—if BTC regains and holds above $99,000. However, sustained momentum would require stronger catalysts such as macro easing or institutional inflows.
Q: How did Ethereum perform relative to Bitcoin?
A: ETH underperformed, ending the week down 6%. Its price is more sensitive to exchange flows and smart contract activity, both of which were impacted by the Bybit incident.
Q: What does the options skew tell us about market sentiment?
A: Short-term skew spiked due to fear after the hack, but long-term skew remains stable. This indicates traders still expect upside potential over time despite near-term risks.
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