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Chart of the Week: Wall Street's 'Fear Gauge' Is Flashing Possible Bitcoin Bottom
The bitcoin to VIX ratio might be signalling a potential long-term bottom for BTC price.
Apr 12, 2025, 5:00 p.m.
What to know:
- The S&P Volatility Index has surged to its highest level since last August, indicating increased market uncertainty.
- The bitcoin to VIX ratio has hit a long-term trendline, historically suggesting a potential bottom for bitcoin prices.
- This trendline has previously marked the bottom for bitcoin during major market events, followed by price rallies.
It’s been an exceptionally volatile week, but one measure may be signaling longer-term bullish sentiment for bitcoin.
The sell-off in equities began on April 3, spurred by President Donald Trump's tariff-led uncertainties. Each day since then has been marked by sharp moves in both directions. The panic has hit both the equities and bond markets, while gold has surged to new all-time highs, and the DXY Index has broken below 100 for the first time since July 2023.
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In response, the S&P Volatility Index (VIX)—often called Wall Street's "fear gauge" —has surged to its highest level since last August and this is where things get interesting for bitcoin.
The ratio of bitcoin to VIX has hit 1,903 currently, touching a long-term trendline that last time coincided with market volatility around the unwinding of the yen carry trade. At the time, bitcoin had reached a bottom of around $49,000.
In fact, this is the fourth time this ratio has hit the trendline and then found the bottom. Previously, it touched the line in March 2020 during the peak COVID-19 crisis and initially in August 2015, both times followed by a rally in prices.
If this trendline continues to serve as reliable support, it could suggest that bitcoin might have once again found a long-term bottom.
Read more: Bitcoin’s Recent Drawdown Proves Its More Than Just a Leveraged Tech Play
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Japan’s Higher Rates Puts Bitcoin in the Crosshairs of a Yen Carry Unwind
A stronger yen typically coincides with de-risking across macro portfolios, and that dynamic could tighten liquidity conditions that recently helped bitcoin rebound from November’s lows.
What to know:
- The Bank of Japan is expected to raise interest rates to 0.75% at its December meeting, the highest since 1995, affecting global markets including cryptocurrencies.
- A stronger yen could lead to de-risking in macro portfolios, impacting liquidity conditions that have supported bitcoin's recent recovery.
- Governor Kazuo Ueda indicated a high probability of a rate hike, with officials prepared for further tightening if their economic outlook supports it.
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