Bitcoin’s ‘fear gauge’ surges nearly 20%, its biggest jump since Feb. 5 crash
The jump signals return of fear after two months of calm market sentiment.
What to know:
- Bitcoin’s fear gauge, BVIV, surged nearly 20% Tuesday, its biggest single-day spike since Feb. 5.
- The jump signals return of fear after two months of calm market sentiment.
Here’s why it matters.
For roughly two months, the bitcoin market sentiment was calm. Even when BTC dropped from its early May high of $82,000 to $75,000 last week, the market sentiment barely flinched. The BVIV actually remained around its year-to-date low of 40% during that move.
In other words, it was orderly selling. No panic. But that changed Tuesday as BTC’s spot price fell over 6% to $66,000.
The BVIV index exploded with that price drop. The index is essentially a fear gauge. When it rises, traders are aggressively buying options to protect against further downside. Tuesday’s nearly 20% surge signals that protection buying is back.
To put Tuesday’s move in context: back on Feb. 5th, BVIV surged over 50% in a single day, hitting above 90% as bitcoin crashed toward $60,000. Tuesday’s jump is nowhere near that level. But the direction of the move is what traders should care about right now.
VIX like behavior
Think of BVIV like bitcoin’s version of Wall Street’s VIX fear gauge. Since U.S. bitcoin ETFs launched over two years ago, institutional players have flooded into the market. That institutionalization has created something interesting: BVIV now moves in the opposite direction of bitcoin’s spot price with increasing consistency. Price drops, fear spikes. Price rises, fear fades.
