On April 7, the VIX spiked to 60, indicating heightened market fear, which Dan Tapiero believes suggests a rebound for Bitcoin within 6 to 12 months. Complementary views from Julien Bittel highlight oversold technology stocks and bearish investor sentiment, further indicating potential market recovery. However, Tony Severino warns of bearish trends in Bitcoin amidst these signals, urging caution.
On April 7, the CBOE Volatility Index (VIX) experienced a notable spike to 60, indicating extreme market fear. Dan Tapiero, CEO of 10Tfund, highlighted that such a spike has only happened five times in the past 35 years, traditionally signalling a rebound for risk assets like Bitcoin (BTC) in a timeframe of 6 to 12 months.
The VIX is regarded as a “fear gauge,” reflecting investor sentiment regarding potential market turbulence, particularly through the trading of S&P 500 options. Historical data, illustrated in associated charts, suggests that these extreme spikes correlate with market bottoms, where panic selling often allows for substantial investment opportunities. Tapiero asserts that the current fear levels are likely already incorporated into market pricing, suggesting a more optimistic outlook.
Supporting Tapiero’s perspective, Julien Bittel from Global Macro Investor (GMI) observed that technology stocks are currently oversold, reminiscent of conditions seen during major downturns like the 2008 financial crisis. Over half of the Nasdaq 100 stocks are reported to have a 14-day Relative Strength Index (RSI) below 30, indicating a market signal indicative of significant crises. Bittel noted that peak uncertainty indicated by the VIX, along with a low bullish sentiment, presents a favourable environment for market re-entry into assets such as Bitcoin.
Additionally, a recent survey by the American Association of Individual Investors (AAII) shows that 62% of respondents are bearish, marking the highest level of negative sentiment since March 2009. Bittel suggests that this combination of fear and a VIX spike lays the groundwork for potential investments in Bitcoin, as liquidity typically returns to risk-on assets once the market stabilises.
However, not all analysts share the same bullish sentiment. Tony Severino cautioned against potential bearish trends indicated by the Bitcoin/VIX ratio. He posited that Bitcoin may have reached its peak for this cycle, although he remains open to reassessing this view in the near future. He cited a sell signal from January, employing Elliott Wave theory to highlight the current bearish momentum, indicating a need for caution regarding Bitcoin’s bullish prospects linked to VIX trends.
This article does not offer investment advice or recommendations. It is essential for investors to carry out their own research and acknowledge that every financial decision carries inherent risks.
