VIX index (a.k.a Cboe Volatility Index) reveals Ithe expected volatility of S&P index in the upcoming 12 months. Apart from its dynamics, it has a nice reputation among traders: FEAR INDEX.
To explain it better,
VIX looks at expectations of future volatility, also known as implied volatility. Times of greater uncertainty (more expected future volatility) result in higher VIX values, while less anxious times correspond with lower values.
By Investopedia
What happens when VIX Index rises?
Bloodbath.
Actually, crypto is tent to be the first market that is effected by the growing FUD wave due to monetary or Covid related cases. As it has a small scale, less volume and more Risk/Reward ratio, the sell-off in crypto will be deeper than what happens in the other markets.
While the VIX index has tendency to rise up, people chase the safer places that they can protect their money untill the day that the hype settles down.
Who to blame? Omicron?
Nah, I would expect more creative excuses to be put forward while the global economy is collapsing. However, the old school way of generating FUD has never changed. Anyway, the expected volatility in S&P may show its negative effects on crypto, too.
Taking Positions in Crypto gets harder
Even though there were no massive pumps in these days, the market was accumulating for another upward move while the crypto inesvtors were getting greedy. Yet, It seems that we need to give a break to the expectation of another ATH in these days. IF th crypto market follows a reverse cycle, $100K would not be surprising untilΕ 2022 but I do not expect this possibility to become real.
Time for Dollarization?
It would not make sense to discuss the pros and cons of hodling any other fiat currency but for USD. In the case of developing countries, the dollarization is the only way that may help them decrease the risks taken by holding fiat money.
For a long while, VIX index has not gone viral while the markets were still green. However, it is likely that the rise in VIX index will trigger many people to consider their positions in markets. Meanwhile, the oversold assets will be owned by wise traders whereas the markets will be harsh for newbies more than before.
Evergrande, once again...
Evergrande could not afford to pay its debt and declared that the upcoming months the amount of payment may not be as high as this month (though the company still needs millions of dollars to pay). So far this narrative has not showed up as harsh as VIX and Omicron but IF Asian market reacts against this Evergrande FUD, then there will be harsh winter for crypto market π»
TL; DR
We are in the verge of a cricital time in which Asian market will reveal its reaction to the collapsing Evergrande and its dept; the rising uncertainty over the new Covid variant Omicron and the increasing VIX that terrifies investors.
These bad news will eventually hit crypto market even though the red days are not permanent in the mid & long term. Personally, I expect to test $34K for Bitcoin if these narratives get stronger to shake the whole market once again. For some time, better to stay away from margin trades.
Sentiment is too powerful for me to open a new long position π₯