Since the crypto market started to trend lower four days ago, analysts have been wondering at which point the pain will stop.
While most analysts remain divided over the answer to this pressing question, one unorthodox factor suggests Bitcoin and the rest of the cryptocurrencies have found or are very close to a local bottom, suggesting a price recovery is imminent.
The crypto market may have finally bottomed
In a tweet published Feb. 27, Josh Olszewicz, an analyst at industry data site Brave New Coin, suggested that every time the “VIX is up, crypto has bottomed (historically).”
For some context, the VIX is the ticker symbol for the Chicago Board Options Exchange’s CBOE Volatility Index, which itself is derived from data of S&P 500 options. trading. Technical terms aside, this index most often rallies when the market falls.
It seems that Olszewicz isn’t bluffing about this forming correlation. CryptoSlate created the below chart to show that the past two times the VIX has been around this level (above 30), BTC found itself around at a macro bottom and local bottom, respectively.
.@CarpeNoctom suggested spikes in the VIX correlate (spurious?) with Bitcoin bottoms. He’s not kidding.
Times the VIX passed 30 in the past 5 years:
Dec 23, 2018: a week after BTC fell to $3,150
Feb 3, 2018: when BTC bottomed at $6,500
Aug 22, 2015: when BTC bottomed at ~$220 pic.twitter.com/vS7E60rNJp
— Nick Chong (@_Nick_Chong) February 27, 2020
The last time the VIX passed 30 was near the end of December in 2018 as the stock market was subject to a -20 percent “Santa Claus” retracement.