Bad Shit Crazy

In reference to doing bad drugs (bad shit) which make a person mentally unstable (crazy.) As opposed to good drugs (good shit.)

Regarding “batshit crazy”
The “t” sound, is a blurring together of words, often more pronounced (obvious) in poorer areas, where people do not annunciate every syllable.
Common sense indicates the drug subculture, who is partly behind the propagation of the expression, came up with it to describe:
“You did bad shit, made you crazy, calm the hell down”

As “bats in the belfry” is a literary expression, and not a live common phrase (go down to the local ghetto and ask who knows what a belfry is, then ask if they know what “bad shit” is).

Contextually most people understand that, to take “bad shit” can make somebody crazy, therefore the obvious result “bad shit crazy.”