The inverse relationship between BTC and the VIX gives us a glimpse into how bitcoin would perform during a larger recession/risk-off environment.
Bitcoin has thrived over the past decade driven by a risk-on/low-interest-rate environment, pushing investors further out on the risk curve in search of returns and alpha. Looking into recent VIX implosions hints that BTC is an easy liquidity trigger during risk-off, and not (yet) a safe haven as many believe, as opposed to gold which performs much better during vol implosions.
Barely a year after the short VIX trade blew up in investors faces back in Feb 2018 and the VIX surge back in Dec 2018, the market is once again record short vol. Another VIX implosion is looming on the horizon - let's see how it plays out on BTC.
Bitcoin has thrived over the past decade driven by a risk-on/low-interest-rate environment, pushing investors further out on the risk curve in search of returns and alpha. Looking into recent VIX implosions hints that BTC is an easy liquidity trigger during risk-off, and not (yet) a safe haven as many believe, as opposed to gold which performs much better during vol implosions.
Barely a year after the short VIX trade blew up in investors faces back in Feb 2018 and the VIX surge back in Dec 2018, the market is once again record short vol. Another VIX implosion is looming on the horizon - let's see how it plays out on BTC.