On April 7, the CBOE Volatility Index (VIX) posted a uncommon spike to 60, a degree seen as a barometer of utmost market concern and uncertainty. In accordance to Dan Tapiero, CEO of 10Tfund, the VIX has hit 60 solely 5 instances in the final 35 years, and knowledge suggests a rebound for threat belongings akin to Bitcoin (BTC) in 6 to 12 months.
The VIX, which is extensively thought-about a “concern gauge,” displays investor expectations of market turbulence based mostly on S&P 500 choices buying and selling. As illustrated in the chart, excessive spikes had been seen in 2008 and 2020, sometimes coinciding with market bottoms, the place panic-driven sellers paved the way in which for generational market entries.
In gentle of that, Tapiero argued that the present spike isn’t any completely different, with the worst of market fears possible “priced in,” setting the stage for a constructive future. Tapiero stated that “odds favor higher future.”
Likewise, Julien Bittel, head of macro analysis at International Macro Investor (GMI), (*6*) Tapiero’s declare and stated that tech shares are at their most oversold because the COVID-19 crash, with over 55% of Nasdaq 100 shares posting a 14-day RSI beneath 30. Such a market signal has occurred solely throughout main crises just like the 2008 Lehman Brothers collapse and the 2020 COVID-19 pandemic.
Bittel explained that after the VIX touched 60 final week, it implied peak uncertainty, which breeds concern in buyers’ minds. Briefly concerning the US Traders Intelligence Survey, Bittel in contrast the present bullish sentiment of 23.6% to the bottom studying since December 2008.
Moreover, the American Affiliation of Particular person Traders (AAII) survey respondents are at present 62% bearish, reflecting the very best bearish studying since March 2009. Bittel stated,
“In different phrases, we’re again on the identical ranges of concern that marked the underside of the fairness market after the International Monetary Disaster.”
This widespread concern, alongside a uncommon VIX spike, units up for market entries in belongings like Bitcoin, because the restoration of market liquidity will inevitably stream again into risk-on belongings.
Related: Saylor, ETF investors’ ‘stronger hands’ help stabilize Bitcoin — Analyst
Analyst warns Bitcoin VIX traits are bearish
Whereas macroeconomic specialists highlighted the potential for a bullish end result for threat belongings, markets analyst Tony Severino suggested that the Bitcoin/VIX ratio may additionally lead to a bear market. In a latest X submit, Severino predicted that Bitcoin may have already peaked this cycle, however remained open a few doable change in opinion by the top of April.
As illustrated in the chart, Severino famous a promote signal firstly of January. The analyst used the Elliott Wave principle mannequin to pinpoint the present bearish situations and stated that it’s nonetheless early to say that Bitcoin will flip bullish based mostly on the VIX correlation.
Related: Bitcoin price volatility ‘imminent’ as speculators move 170K BTC — CryptoQuant
This text doesn’t include funding recommendation or suggestions. Each funding and buying and selling transfer entails threat, and readers ought to conduct their very own analysis when making a choice.
