Key Insights:
- The S&P Volatility Index (VIX) has reached its highest point since last August, reflecting a rise in market uncertainty.
- The ratio of bitcoin to VIX has met a historical trendline, often indicating potential bottoms in bitcoin pricing.
- This trendline has successfully marked previous bottoms during significant market fluctuations, typically leading to price recoveries.
It has been a notably turbulent week, yet one indicator may be hinting at a more optimistic outlook for bitcoin over the long term. The recent decline in equities started on April 3, following uncertainties stirred by President Trump’s tariffs. Each subsequent day has witnessed considerable fluctuations in both the stock and bond markets, with gold reaching unprecedented highs and the DXY Index dropping below the 100 mark for the first time since July 2023.
In this context, the S&P Volatility Index—a measure commonly referred to as Wall Street’s “fear gauge”—has soared to levels not seen since August of the previous year. This trend is particularly relevant for bitcoin.
The bitcoin to VIX ratio currently stands at 1,903, having hit a long-term trendline that previously aligned with volatility during events such as the unwinding of the yen carry trade, when bitcoin dipped to approximately $49,000. This indicator has reached noteworthy levels three times prior, with each encounter previously leading to upward price movements, such as during the COVID-19 crisis in March 2020 and previously in August 2015.
If the trendline continues to provide stable support, it may imply that bitcoin has indeed found yet another long-term bottom.
Read more: Bitcoin’s Recent Drawdown Proves Its More Than Just a Leveraged Tech Play
