Bitcoin’s Price Counters the VIX, Confirming It’s Still a Risk Asset
BTC/USD vs. VIX
Disclosure: The writer holds BTC, AST, REQ, OMG, FUEL, 1st and AMP at the right time of writing.
The VIX published two significant peaks in 2018. The first occurred on Feb. 6 when it touched 50.3 and the moment on Dec. 24 when it touched 36.1.
Bull endure reflection via Shutterstock
Bitcoin’s negative correlation with the VIX reveals it performs badly when dread in the U.S. equities marketplace creates a “risk-off” surroundings — by definition, the reverse of a safe haven asset.
Bitcoinbeing a store of value which isn’t the item of a government, is advertised to be unaffected by the perceived anxiety or risk in virtually any market, but as the graph below reveals, that’s not yet the case.
Published at Tue, 22 Jan 2019 04:31:14 +0000
Wrong. Bitcoin inversely correlated with the VIX on both occasions. Whenever the VIX reached its first summit, bitcoin had only stopped falling 70 percent from the January highs and throughout the next summit, its cost had only declined another 50 percent.
For reference, the internationally recognized safe haven strength, gold, positively correlated with the VIX throughout its two big peaks in 2018.
Needless to say, anxiety has been, and still is, prevalent from the broader U.S. Stock market, that should have resulted in either a secure or bullish bitcoin, right?
The VIX measures the 30-day forward-looking volatility of this S&P 500 to gauge the sector ’s anxiety and risk tolerance, which is the reason it’s usually referred to as the “panic gauge” for the broader U.S. stock market.
At the very first summit, the S&P 500 was down nearly 10 percent from the January highs and about the next summit it had been down closer to 20 percent from the record highs attained only two months prior.
Evidence is emerging which bitcoin has yet to truly earn its reputation as an “uncorreleated asset. ”
Goldagain, correlated with the VIX throughout its December summit. As Australians started crashing and worries of a worldwide economic downturn circulated, the glistening metal had already been at a 20 week long and more than 10 percent uptrend.
Gold vs. Bitcoin
In theory, the VIX ought to be low once the S&P 500 is at a steady uptrend and should simply increase as does anxiety, inducing panic selling and also for either smart or feeble hands to be shaken out of this market.
Really, the physical store of value remains bringing in its title because of a safe haven asset although the electronic alternative has yet to be in a position to.