BTC Options Skew Turns Negative with Crude Jumping on Middle East Conflict Fears

Bitcoin Dips to Key Technical Level as Oil Soars on Middle East Conflict, Options Traders Turn Defensive

Geopolitical tensions in the Middle East rattled global markets early Thursday, sending oil prices soaring and dragging bitcoin down to a critical support zone.

Bitcoin (BTC) tumbled as low as $103,150, touching its 50-day simple moving average, before recovering slightly to trade around $105,320, down 4.6% on the day. The decline deepened a broader crypto sell-off that began earlier in the week and coincided with reports of Israeli airstrikes on Iranian nuclear and military sites in Tehran.

Traders rushed to hedge against further losses, with BTC’s short-term options skew—a measure of demand for puts versus calls—falling to -3.84%, its lowest level since mid-April, according to Amberdata. Skews on the 30- and 60-day tenors also turned negative, signaling a broader shift in sentiment.

“Market participants are rotating quickly into protective puts, suggesting increased anxiety about near-term downside,” said a derivatives strategist at QCP Capital.

Oil Rips Higher on Strike News

The military escalation also sent oil prices sharply higher. WTI crude jumped over 6% to $74.30 per barrel, the highest level since February 3, and up 13% for the week. Analysts attribute the surge to fears of a broader regional conflict that could disrupt global energy supplies.

Israeli Prime Minister Benjamin Netanyahu confirmed the strikes, calling them a “preemptive measure” to neutralize Iran’s nuclear threat. Iran is believed to have launched retaliatory missile strikes, although damage assessments remain unclear.

Inflation Jitters and Fed Policy

The sudden oil shock could complicate the U.S. Federal Reserve’s path forward. Energy-driven inflationary pressures, combined with weaker-than-expected PPI data and rising jobless claims, are muddying the outlook for interest rate cuts.

President Donald Trump, responding to the tensions, renewed pressure on Fed Chair Jerome Powell to lower rates, calling him a “numbskull” and warning he “may have to force something.”

Risk markets responded accordingly: S&P 500 futures fell 1.5%, gold climbed 1% to $3,436, and safe-haven currencies like the yen gained against the dollar.