Knowledge reveals that Bitcoin has more and more behaved like a risk-on asset within the yr 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 newest weekly report from Arcane Analysis, BTC has behaved like a risk-on asset this yr because the crypto’s value has appeared to comply with VIX.
“VIX” is the ticker image for the Chicago Board Choices Alternate’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 preferred strategy to discuss 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 be sometimes called the “concern gauge.”
When the worth of this metric is excessive, it means a better volatility within the inventory market might comply with within the close to future. However, low values of the index would recommend a interval of low volatility is likely to be there quickly.
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Now, here’s a chart that reveals the obvious relationship between the worth of Bitcoin and the VIX index:
Seems to be like BTC's value has more and more develop into associated to the index over the previous few years | Supply: The Arcane Analysis Weekly Replace - Week 51
As you’ll be able to see within the above graph, through the yr 2019, which is earlier than COVID got here round, Bitcoin didn’t appear to be affected by concern within the broader market.
Nevertheless, following the financial and financial insurance policies that had been accredited through the COVID period, institutional buyers began getting within the coin.
In 2020, the connection between VIX and the Bitcoin value was nonetheless unclear. However from the info of the yr 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, exhibiting that institutional buyers for probably the most half take into account the crypto to be a risk-on asset.
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The report notes that due to this, it might be value maintaining a tally of VIX as concern within the inventory market might have implications for BTC’s value.
On the time of writing, Bitcoin’s value floats round $47.5k, down 2% within the final seven days. The beneath chart reveals the pattern within the value of the coin over the previous 5 days.
BTC's value has plunged down in the previous couple of days | Supply: BTCUSD on TradingView
Featured picture from Unsplash.com, charts from TradingView.com, Arcane Analysis