VIX Raising “Red Flag” On Stocks, Could Be Bearish For Bitcoin

Tony "The Bull" Severino

Last Updated: June 11, 2024 2:15 pm

3 mins read

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Analysts rely on a variety of tools to tip them off about coming price action, with some offering better results than others. A top and bottom-sniping tool used to call the 2007 top in the stock market, is once again raising a red flag. Here’s why this could also be bearish for Bitcoin and the rest of the cryptocurrency market.

Stock Market Raises “Red Flag” Warning Sign, Analyst Warns Of “Impending Reversal”

The stock market pumped today on Jerome Powell’s monetary policy speech, while Bitcoin price tanked.

The S&P 500 set yet another daily all-time high even as the economy struggles, unemployment soars, the GDP shrinks, and the pandemic rages on.

Most signs point to the stock market being in a bubble that is ready to burst. Yet stimulus money has kept equities climbing to outrageous valuations.

But as the stock market sets a new high, it has created a bearish divergence with the VIX volatility index, which one former hedge fund and investor, Jesse Felder, claims signals “an impending reversal.”

This reversal signal was the key to timing the 2007 top ahead of the Great Recession, and the 2009 bottom when things finally began to turn around.

The signal is back, and it could end up hurting Bitcoin and the rest of crypto as much as it crushes the stock market.

Volatility Index (VIX) Impact On Bitcoin (BTCUSD) & S&P 500 (SPX) | Source: TradingView

Bitcoin Bulls Beware: Crypto Collapsed The Last Time VIX Crushed Stocks

The crypto bubble is long in the past, but the greater financial market bubble continues to inflate.

The stock market has already recovered from its Black Thursday low completely and set a new all-time high on most major indices.

That day, crypto suddenly became tightly correlated to stocks, and Bitcoin flash crashed by over 50% alongside the S&P 500, gold, and nearly every other asset.

The correlation with Bitcoin turned from stocks to gold, helping propel the entire crypto market cap towards its first sustainable recovery. But that now could be at risk, thanks to a bearish divergence on the VIX index.

According to the Felder Report author Jesse Felder, the “VIX warning signal is flashing again as it did earlier this year.” “In short, the options market is sending a message that volatility going forward is likely to be greater than the stock market currently implies,” he added.

The VIX measures the expected volatility of the S&P 500 but can have an enormous influence on total market volatility. And this is why the same signal also poses a threat to Bitcoin.

Tony "The Bull" Severino

Tony "The Bull" Severino, CMT, is a distinguished figure in the cryptocurrency analysis sector, renowned for his in-depth technical expertise and innovative approach to market trends. As the Head of Research at NewsBTC, Tony leads a team dedicated to providing cutting-edge insights and forecasts, helping both novice and experienced traders navigate the complexities of the crypto market.
A seasoned Chartered Market Technician, Tony's prowess in identifying and capitalizing on market patterns is unmatched. His academic and professional journey in market analysis has firmly established him as a leading authority in technical trading strategies. Tony’s approach is heavily influenced by the principles of Elliott Wave Theory, a method known for its rigorous assessment of investor psychology and price movements.

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In addition to his educational initiatives, Tony is a prolific author and a dominant voice in the crypto community. He writes the CoinChartist VIP newsletter, a weekly dispatch that has become a staple among crypto enthusiasts, revered for its insightful analysis and actionable trading advice. This newsletter has consistently ranked as a best-seller on SubStack, boasting thousands of subscribers who rely on Tony’s expertise to guide their trading strategies.

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Before his ascent in the financial analysis world, Tony honed his skills in journalism. His background in this field has endowed him with a unique ability to present intricate market dynamics in a clear and compelling manner, making his insights highly sought after by a broad audience that ranges from casual readers to professional traders.
His professional affiliations underscore his commitment to excellence and continuous learning. As a partner of Elliott Wave International and TradingView, Tony collaborates with other leading experts to enhance his knowledge and skills. His active membership in the CMT Association further aligns him with the highest standards of industry practices and ethics.

Tony’s nickname, "The Bull," aptly reflects his aggressive and optimistic outlook on the cryptocurrency markets. His forecasts often anticipate significant upturns, earning him a reputation for bullish predictions that have frequently led to lucrative outcomes for those who follow his advice.

In summary, Tony "The Bull" Severino, CMT, is more than just a technical analyst; he is a mentor, educator, and innovator whose influence in the cryptocurrency space continues to grow. His dedication to advancing the understanding of market forces and his commitment to providing high-quality, reliable analysis make him a pivotal figure in the world of cryptocurrency trading.

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