Bitcoin’s Last Support Before $100K Breaks as 'Mag 7' Skew Flips, Oracle CDS Surges

Bitcoin BTC$89,084.77 has fallen below a key support level that had been holding back a slide toward $100,000, amid weakening momentum in tech stocks.

The leading cryptocurrency fell below $106,000 during Asian trading hours, penetrating the level that had offered support multiple times in recent weeks, according to CoinDesk data. Major altcoins such as ether ETH$3,032.53, XRP$2.0343 and solana SOL$131.83, with SOL sliding to $157, the lowest since Aug. 3. Ether also fell to its lowest since August, with a bear cross of key moving averages pointing to strengthening of downside momentum and XRP hit a three-week low.

BTC's breakdown shifts focus to the $100,000-$101,000 area, according to Markus Thielen, founder of 10x Research. A violation there could open the door to a deeper test near $94,000, or even a full retracement toward $85,000, the maximum pain zone that also aligns with strong on-chain support, Thielen said in a note to clients.

"While such a move would be extreme, downside risk remains contained as long as bitcoin holds above its prevailing downtrend line," he added.

BTC's dour price action follows dwindling odds of rapid Fed rate cuts and signs of bullish turnaround in the dollar index, which tracks the greenback's value against major currencies.

Mag 7 skew flips

Furthermore, there are signs of overexuberance in the so-called “Magnificent 7” stocks — Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta, and Tesla — which is typically seen at major market tops.

"The put-call skew in the Mag7 complex inverted for the first time since December of last year (i.e. implied volatility of calls traded over puts). This phenomenon has only happened a handful of times. The move implies investors are overwhelmingly positioned for continued upside," analyst Neil Sethi said on X, quoting Goldman Sachs.

"Historically, such low skew readings have tended to coincide with short-term consolidation or reversals as optimism peaks," Sethi added.

Oracle CDS surges

At the same time, the credit default swap (CDS) tied to Oracle, which measures the cost of insuring against a potential default, has surged following the company’s massive third-quarter AI investment disclosures – reaching levels not seen outside periods of significant macro stress.

This, according to some analysts, represents investor anxiety regarding the booming AI spending. AI optimism has been one of the major drivers of the bull market in both stocks and wider risk assets, including cryptocurrencies, since 2023.

All things considered, bulls might be better off being cautious rather than overly exuberant.