[Analysis] Sky Protocol's $96M Buyback Signals Defensive Posture Amid Extreme Fear

• Sky Protocol executed 29.3 million SKY buyback worth $1.9 million in seven days
• Total buyback program now exceeds $96 million since February 2025 launch
• Market structure suggests defensive positioning as Crypto Fear & Greed Index hits 24/100
• Technical analysis identifies critical Fibonacci support at $0.065 with $0.058 invalidation

NEW YORK, December 29, 2025 — Sky Protocol has deployed $1.9 million to repurchase 29.3 million SKY tokens over seven days, bringing total buyback expenditure to $96 million since program inception. This latest crypto news emerges against a backdrop of Extreme Fear sentiment across digital asset markets, with Bitcoin trading at $87,570 amid broad risk-off positioning.

Market Context & Background

Protocol-level buybacks represent a structural response to tokenomics pressure. Sky Protocol's aggressive accumulation mirrors defensive maneuvers observed during previous market contractions. The $96 million cumulative expenditure establishes a significant order block in SKY's volume profile. Market structure suggests this positions the protocol as a dominant buyer during liquidity droughts. Related developments include Trend Research withdrawing $39 million ETH from centralized exchanges and Ethereum's staking queue surpassing unstaking for the first time in six months, both indicating capital preservation strategies.

What Happened?

According to protocol statements, Sky Protocol executed daily buybacks between December 22-28, 2025. The 29.3 million SKY acquisition represents approximately 0.8% of circulating supply based on CoinMarketCap data. Transaction records indicate the $1.9 million expenditure was denominated in USDS, Sky Protocol's native stablecoin. This brings the ten-month buyback program to $96 million, averaging $9.6 million monthly. The protocol rebranded from MakerDAO in Q4 2024, inheriting MKR's governance infrastructure while implementing enhanced tokenomics.

Technical Analysis & Price Action

SKY currently trades at $0.067, testing the 0.618 Fibonacci retracement level from its 2025 high of $0.112. The 50-day moving average at $0.071 provides immediate resistance. RSI readings at 42 indicate neutral momentum with bearish divergence on higher timeframes. Volume profile analysis shows concentrated liquidity between $0.065-$0.068, corresponding with the recent buyback zone. Market structure suggests the protocol is defending this Fair Value Gap against further downside. Bullish invalidation: $0.058 (2025 low). Bearish invalidation: $0.078 (200-day MA).

By The Numbers

Why It Matters

For institutions, sustained buybacks signal balance sheet strength during market stress. The $96 million expenditure represents approximately 15% of Sky Protocol's treasury based on public disclosures. This creates artificial demand that may mask underlying selling pressure. For retail, the buyback establishes a psychological support level but doesn't guarantee price appreciation. Historical data from the Federal Reserve indicates quantitative tightening cycles typically pressure risk assets, making defensive positioning prudent.

Community Sentiment

Market analysts on X/Twitter describe the buyback as "capital-efficient defense" against broader market deleveraging. One quant trader noted: "Protocols accumulating their own tokens during Extreme Fear typically outperform during recovery phases." Skeptics point to diminishing returns, with each successive buyback providing less price support as circulating supply contracts.

Price Prediction / Future Outlook

Bullish Case: SKY holds $0.065 Fibonacci support. Buyback program expands to $150 million by Q2 2026. Market sentiment improves from Extreme Fear. Price target: $0.085 (38.2% Fib). Bearish Case: SKY breaks $0.058 invalidation level. Buyback treasury depletes below sustainable threshold. Broader crypto market experiences Gamma Squeeze to downside. Price target: $0.045 (78.6% Fib).

FAQs

What is Sky Protocol?Sky Protocol is a decentralized finance platform that rebranded from MakerDAO, focusing on algorithmic stablecoins and governance.

Why do protocols buy back their own tokens?Buybacks reduce circulating supply, potentially increasing token scarcity and supporting price during market downturns.

How does the Crypto Fear & Greed Index work?The index aggregates multiple metrics including volatility, market momentum, and social media sentiment to gauge market psychology.

What happens if SKY breaks below $0.058?Technical analysis suggests this would invalidate the current support structure, potentially triggering accelerated selling.

Are protocol buybacks sustainable long-term?Sustainability depends on treasury reserves and revenue generation. Excessive buybacks can deplete war chests needed for development.

Data source: Read Original Report

Source Note: Market data and factual reporting in this article are sourced from original reports. Commentary and analysis provided by CoinMarketBuzz.