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Bitcoin Price May Be ‘Fear Gauge’ for Stock Market: VIX Analyst

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“Bitcoin is a way to for investors to basically move their money off the balance sheets of banks and into their own wallets,” he added. “Essentially storing their money under their pillow in the form of virtual currency.”

Source: CBOE

While bitcoin’s reputation as a volatile cryptocurrency may give the impression that stock traders would shun it in favor of a more stable haven, SEC Chairman Jay Clayton pointed out that these days bitcoin is actually less volatile than the VIX, something that may come as a surprise to many.

“Just recently the volatility in bitcoin was not as great as the volatility we’ve seen in other securities, such as the VIX product,” said Clayton.

The benefits of avoiding credit risk plus the median stability provided by bitcoin compared to the stock market overall may have turned bitcoin into a leading indicator in the stock market.

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