Why The VIX Could Predict A 20% Bitcoin And Crypto Rally

Thomas Lee, managing partner and head of research at Fundstrat Global Advisors, outlined in a recent CNBC interview why the VIX – a real-time volatility index from the Chicago Board Options Exchange (CBOE) – will become an important indicator for equity markets and possibly Bitcoin in the coming months. VIX was created to quantify market expectations of volatility for the S&P 500. In doing so, the VIX is future oriented, meaning that it only shows the implied volatility for the next 30 days. The rule of thumb is: if the VIX increases, the S&P 500 is likely to decrease, and if the VIX value decreases, the S&P 500 is likely to remain stable or increase. Fundstrat Analyst Expects A 20% S&P 500 Rally In 2023 Lee expects a 20% rally for the S&P 500 this year. Why? According to the chief analyst, inflation surprised the Fed on the downside last year. This year, it will be the other way around. Inflation will fall faster than the Fed recently forecasted. This will have a decisive impact on the VIX, which will decline in value. “The bond market volatility is below its 200 day [average]. If that happens to the VIX, we would be at 17,” Lee claims and continues to say that “since the 1950s, following a negative year, if the VIX is lower on average than the prior year, we are up an average of 22%. So I think we are set up for a 20% year.” Related Reading: Bitcoin On-Chain Data Shows Weak Baseline For 2023: Report According to the Fundstrat analyst, Thursday will be very telling. If the core CPI is again below consensus, that means the original Fed forecast of 4.8% for PCE is 60 basis points too high. “And that means inflation is undershooting by a huge margin. The bond market is gonna push the Fed to say that February might be the last hike and after that it cuts,” Lee asserts. Why @fundstrat says stocks could rally more than 20% this year, despite the latest #Fedspeak pic.twitter.com/fToibbPp2W — CNBCOvertime (@CNBCOvertime) January 9, 2023 What Does This Matter For Bitcoin? For bitcoin, the prediction of Thomas Lee is interesting in that the price had a high correlation with the S&P 500 (with a higher beta) over the past year, unless there were crypto-intrinsic shocks like the collapse of FTX or Terra Luna. This meant that the bitcoin price behaved very similarly to the S&P 500, but was more volatile in both directions in response to changes in the market. Related Reading: Why Justin Sun’s Stablecoin USDD Is Struggling To Maintain Its Dollar Peg To that extent, the VIX (currently standing at 22) can also be used as a sentiment barometer for bitcoin. If Lee’s predicted drop in the VIX to 17 actually occurs – either as a result of positive CPI data or a pivot by the U.S. Federal Reserve – BTC could see a rally towards $20,000. As recently as November, Lee said he was sticking to his bitcoin price forecast of $200,000, even if the current market is negative. According to him, the BTC price will rise in tandem with the S&P 500 if there are no more scams and bankruptcies of key players in the crypto industry. At press time, the bitcoin price was showing a slight uptrend over the past week, trading at $17,296. Featured image from Art Rachen / Unsplash, Chart from TradingView.com

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Price Slump For Bitcoin Looming As VIX Rises Back Above 20

The Bitcoin price has currently stabilized strongly around the $17,000 mark. However, the price could face further headwinds in the coming days, as the VIX exposes. The VIX is a real-time volatility index from the Chicago Board Options Exchange (CBOE). It was created to quantify market expectations of volatility. In doing so, the VIX is forward-looking, meaning that it only shows the implied volatility of the S&P 500 (SPX) for the next 30 days. Basically, if the VIX value goes up, the S&P 500 will likely go down, and if the VIX value goes down, the S&P 500 will likely remain stable or go up. This is exactly what was seen yesterday. The VIX bounced up to 19, a level that was last seen in mid-August. As a result, the S&P 500 lost the weekly support area at 4040 and fell 1.8%. In August, the last time the VIX was this low, it rebounded, and the S&P 500 fell 15%. The Importance Of The VIX For Bitcoin Besides the VIX and the S&P 500, it is important to understand that Bitcoin, with higher beta, is highly correlated with the S&P 500. This means that the Bitcoin price is more sensitive to changes in the market in both directions. As predicted by the VIX, BTC bounced off the $17,400 horizontal resistance yesterday and dropped below $17,000. Related Reading: Peter Schiff And Jim Cramer Present Their Doom Scenarios For Bitcoin, Cardano, XRP, Dogecoin In October, when the VIX was down, and the S&P 500 was up, Bitcoin experienced a black swan event with the FTX collapse, after which BTC fell to $15,500. Thus, the Bitcoin price did not enjoy the momentum of the VIX. At the moment, a possible reversal of the VIX at 19 could serve as a kind of sentiment barometer for the S&P 500 and Bitcoin for the next few weeks. The VIX is being compared to the 2006-2009 crash, a nasty outlook that would mean much lower prices. Analyst Sam Rule writes that the recent BTC rally following stocks is occurring at a time when the VIX is depressed to a level of 20. Although there has been a massive industry leverage wipe-out in the crypto industry, the stock market has yet to experience such an event. Given Bitcoin’s correlation with the S&P 500, this could mean another price drop, as Rule writes: Is 25% drawdown from ATH all we’re getting in S&P 500 this cycle during the popping of the great everything bubble? Would you expect #BTC to bottom here if SPX scenario fell >40% from ATH in coming months? SPX drawdowns from ATH 1-week, Source: Twitter Why VIX Has Limited Applicability To BTC However, the VIX should not be used as the sole deterministic indicator of future market direction. Why? The VIX relies on expectations set by past events rather than what will happen in the future. Investors are notoriously prone to irrational exuberance. Related Reading: Bitcoin Price Lacking Momentum Above $17k, BTC Holders Are Safe: Here’s Why In addition, the VIX cannot account for sudden, unexpected events that can cause strong market reactions. However, these events are key to identifying a change in market direction, such as a bear market bottom. Therefore, Bitcoin investors should also keep an eye on other factors, such as the upcoming decision by the U.S. Federal Reserve on further interest rate policy, further contagion effects in the crypto market, and other intrinsic factors, such as miner capitulation.

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Ethereum price prediction as the VIX index makes a comeback

Ethereum (ETH/USD) price remained under pressure as the recent Merge failed to lift prices and the VIX index surged. The coin crashed to a low of $1,210, which was the lowest level since July 16 of this year. It has crashed by more than 35% from its highest level this month.

Ethereum and other relatively riskier assets have come under intense pressure as volatility in the financial market rises. The closely-watched VIX index has risen to $32, which is much higher than this year’s high of less than $20.

VIX is an index that was created by CBOE and Goldman Sachs to evaluate the amount of volatility in the stock market, It looks at the options market in the S&P 500 index to determine the positioning among investors.

This volatility increased this week. For example, on Wednesday, Vladimir Putin increased his pressure in Ukraine by threatening to use nuclear weapons in the crisis. As a result, there are high chances that the crisis will escalate and increase existing risks.

Meanwhile, as I wrote in this article, the Federal Reserve concluded its two-day meeting on Wednesday and continued with its hawkish tone. The bank decided to hike interest rates by 0.75% for the third straight month. As such, the Fed has increased rates by 300 basis points this year, the most in decades.

Most importantly, the Federal Reserve’s dot plot showed that most members believe that interest rates will continue rising in the coming months. Precisely, they expect that the Fed will hike by 0.75% in November and 0.50% in December.

As a result, most financial assets like the Dow Jones and the Nasdaq 100 have all continued falling. Cryptocurrency prices also nosedived. The US dollar index has risen to the highest level in more than 2 decades.

The daily chart shows that Ethereum price has been in a strong downward trend in the past few months. It managed to move below the important support level at $1,423, which was the lowest level on August 29. The coin has also crashed below the 25-day and 50-day moving averages while the Relative Strength Index (RSI) has moved close to the oversold level.

Therefore, there is a likelihood that Ethereum will continue falling as sellers target the next key support level at $1,000. A move above the resistance level at $1,500 will invalidate the bearish view.

The post Ethereum price prediction as the VIX index makes a comeback appeared first on Invezz.

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Evaluating Bitcoin’s Risk-On Tendencies

It’s possible that equities volatility has yet to peak this year and further volatility spikes could have a negative impact on the bitcoin price.

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This Indicator is helping Crypto Traders make money…How to use VIX?

Ukraine, interest rates, inflation, and declining economic growth. The global economy has been shaken in recent weeks like it hasn't been in a long time. This resulted in the fourth-worst start to a stock market year. Most investors will have noticed that the depot is a bit like a roller coaster. Monday 4% up, Tuesday 6% down. The strong fluctuations currently dominating the market are called volatility. Investing in a volatile market can be difficult and nerve-wracking. In this article, we're going to introduce an indicator that crypto traders can use to their advantage, known as the "Fear Index". How to use VIX? Let's find out.

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Bitcoin Price Surge Unlikely With System Volatility So High

With the VIX indicating systemic volatility, it's hard to imagine bitcoin making a larger upwards move in price.

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Macro Market Responds To Ukraine Crisis

The Ukraine crisis has washed out the traditional finance and crypto markets. What are the charts telling us about the macro environment? Covered: S&P 500 Gold Bitcoin VIX The macro environments have taken drastic shifts overnight, and although we’re seeing losses in the traditional finance and crypto markets, keep in mind that the losses of […]

The post Macro Market Responds To Ukraine Crisis appeared first on CryptosRus.

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What BTC price slump? Bitcoin outperforms stocks and gold for 3rd year in a row

But concerns remain that the cryptocurrency could fall harder than its traditional rivals in 2022 on the U.S. Federal Reserve’s increasingly hawkish tones.

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What Is The CVI? How Was It Developed? What Are Future Plans for the Product?

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VC Roundup: Web3 funding hits $5.4B in 2024

Blockchain-based startups raised $1.4 billion in the third quarter, bringing investments year-to-date to over $5.4 billion. 

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