On April 7, the CBOE Volatility Index (VIX) posted a uncommon spike to 60, a degree seen as a barometer of utmost market worry and uncertainty. Based on Dan Tapiero, CEO of 10Tfund, the VIX has hit 60 solely 5 instances within the final 35 years, and knowledge suggests a rebound for threat belongings similar to Bitcoin (BTC) in 6 to 12 months.
The VIX, which is broadly thought of a “worry gauge,” displays investor expectations of market turbulence primarily based on S&P 500 choices buying and selling. As illustrated within the chart, excessive spikes had been seen in 2008 and 2020, usually 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 optimistic future. Tapiero mentioned that “odds favor higher future.”
Likewise, Julien Bittel, head of macro analysis at World Macro Investor (GMI), supported Tapiero’s declare and mentioned that tech shares are at their most oversold for the reason that COVID-19 crash, with over 55% of Nasdaq 100 shares posting a 14-day RSI under 30. Such a market sign has occurred solely throughout main crises just like the 2008 Lehman Brothers collapse and the 2020 COVID-19 pandemic.
Bittel defined that after the VIX touched 60 final week, it implied peak uncertainty, which breeds worry in traders’ 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 presently 62% bearish, reflecting the best bearish studying since March 2009. Bittel mentioned,
“In different phrases, we’re again on the similar ranges of worry that marked the underside of the fairness market after the World Monetary Disaster.”
This widespread worry, alongside a uncommon VIX spike, units up for market entries in belongings like Bitcoin, because the restoration of market liquidity will inevitably movement again into risk-on belongings.
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Analyst warns Bitcoin VIX traits are bearish
Whereas macroeconomic specialists highlighted the potential for a bullish consequence for threat belongings, markets analyst Tony Severino prompt that the Bitcoin/VIX ratio may additionally result in a bear market. In a current X submit, Severino predicted that Bitcoin may have already peaked this cycle, however remained open a couple of potential change in opinion by the tip of April.
As illustrated within the chart, Severino famous a promote sign originally of January. The analyst used the Elliott Wave principle mannequin to pinpoint the present bearish circumstances and mentioned that it’s nonetheless early to say that Bitcoin will flip bullish primarily based on the VIX correlation.
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This text doesn’t include funding recommendation or suggestions. Each funding and buying and selling transfer includes threat, and readers ought to conduct their very own analysis when making a choice.