Knowledge exhibits that Bitcoin has more and more behaved like a risk-on asset within the 12 months 2021 as its value actions have reacted to the VIX volatility index.
Bitcoin Cements Itself As A Threat-On Asset Throughout The 12 months 2021
As per the most recent weekly report from Arcane Research, BTC has behaved like a risk-on asset this 12 months because the crypto’s value has appeared to observe VIX.
“VIX” is the ticker image for the Chicago Board Choices Change’s Volatility Index. This index tells us in regards to the inventory market’s expectations of the volatility primarily based on S&P 500 index choices.
Whereas the official identify is the CBOE volatility index, the identify “VIX” has caught on as the most well-liked option to check with it.
The VIX index is a real-time indicator that measures the anticipated volatility out there for the approaching thirty days. The index can also be also known as the “concern gauge.”
When the worth of this metric is excessive, it means a better volatility within the inventory market might observe within the close to future. However, low values of the index would recommend a interval of low volatility could be there quickly.
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Now, here’s a chart that exhibits the obvious relationship between the value of Bitcoin and the VIX index:
Appears to be like like BTC's value has more and more change into associated to the index over the previous few years | Supply: The Arcane Research Weekly Update - Week 51
As you’ll be able to see within the above graph, through the 12 months 2019, which is earlier than COVID got here round, Bitcoin didn’t appear to be affected by concern within the broader market.
Nonetheless, following the financial and monetary insurance policies that had been authorised through the COVID period, institutional investors began getting within the coin.
In 2020, the connection between VIX and the Bitcoin value was nonetheless unclear. However from the info of the 12 months 2021, it’s seen that there’s now a correlation between the 2 metrics.
Bitcoin has responded to concern within the inventory market throughout 2021, displaying that institutional buyers for essentially the most half contemplate the crypto to be a risk-on asset.
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The report notes that due to this, it might be value keeping track of VIX as concern within the inventory market might have implications for BTC’s value.
On the time of writing, Bitcoin’s price floats round $47.5k, down 2% within the final seven days. The under chart exhibits the pattern within the value of the coin over the previous 5 days.
BTC's value has plunged down in the previous few days | Supply: BTCUSD on TradingView
Featured picture from Unsplash.com, charts from TradingView.com, Arcane Analysis