Evaluating Bitcoin’s Risk-On Tendencies
The below is an excerpt from a current edition of Bitcoin Magazine Pro, Bitcoin Magazines premium markets newsletter. To be among the very first to get these insights and other on-chain bitcoin market analysis straight to your inbox, subscribe now.Bitcoins Correlation With VolatilityBitcoin is far more than an “inverse VIX” however that doesnt stop the market from trading it as such. (“VIX is the ticker sign and the popular name for the Chicago Board Options Exchanges CBOE Volatility Index, a popular measure of the stock exchanges expectation of volatility based on S&P 500 index options.”)As Bitcoins adoption, monetization and education continues, principles and network growth will be the more vital chauffeur of rate gratitude. In the existing environment, risk-off market signals and wider market volatility are in the motorist seat.We can approximately quantify this bitcoin and volatility relationship by looking at the Chicago Mercantile Exchange bitcoin futures and VIX rolling correlations throughout 30-day, 180-day and 90-day timeframes over the last couple of years.Bitcoin futures and VIX 30-day connection Bitcoin futures and VIX 90-day connection Bitcoin futures and VIX 180-day correlation On the other hand, March 2020 offered us an interesting example of how bitcoin may carry out post market crash, huge volatility spike and increased debt money making throughout financial and fiscal policies to assist save the market and financial conditions. Bitcoin is now 716% up from its March 2020 bottom of $4,930. Bitcoins connection to the VIX is bad now during a credit loosen up, but its a favorable quality during reflationary periods and falling volatility.From a more comprehensive macroeconomic perspective, this is why we remain bullish on bitcoin on a longer time horizon post another situation crash in risk properties. If were to see this scenario play out and when the dust settles, bitcoin will be primed to exceed almost every other possession in our view based on its adoption curve, fundamentals and as an exceptional monetary network.