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Why VIX can be a good tool for monitoring BTC volatility

The VIX (Cboe Volatility Index) is objectively considered the best volatility index in the U.S. market. Rising values indicate an increase in volatility, falling values indicate a decrease in volatility. Thus, near particularly important events, the VIX tends to rise while it tends to fall near periods considered objectively calm for the markets.

Bitcoin historically has a correlation index greater than 0.6 with the NASDAQ whose volatility is well represented by the VIX. Therefore, it is simple to conclude that a correct volatility index with regard to the crypto world may be the Cboe Volatility Index (VIX). This is because altcoins are correlated with BTC with an index above the average 0.9.

So when the VIX goes up it is presumable to expect major movements for the crypto sector as well, conversely there will be flat calm for low values. Traders who work through volatility with reversal or range strategies should wait until the VIX reaches values above 30 points to trade. Conversely, those working with directionality might be wise to wait for values below 20 to set up intraday trades.


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