This New Indicator May Tell You Where Bitcoin Is Headed

For many years, investors in stocks have been able to see how volatile the market is expected to be by relying on a gauge called the CBOE Volatility Index, or VIX. This measure, often called the “fear gauge,” reads how much volatility investors are expecting based on option prices.

Nothing like this has ever existed for cryptocurrencies. Until now:

A bitcoin “fear gauge,” similar to the Cboe Volatility Index (VIX) investors use to gauge volatility in the stock market, saw its first trades on Wednesday.

The T3i BitVol Index measures the expected 30-day implied volatility in bitcoin derived from tradable bitcoin option prices.

The index goes two years back so far. Current expected volatility appears higher than normal.

A high VIX tends to correlate with a drop in stocks. A low VIX tends to predict calm, gradually rising markets. This pattern may hold with Bitcoin as well, giving crypto holders a chance to see a bit into the future.

For more on the latest in cryptocurrencies, check out these posts:

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Photo: “Winklevoss Twins – Caricature” by DonkeyHotey is licensed under CC BY-SA 2.0

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