Consistent as She Goes

Consistent as She Goes


Volatility is back in the cryptocurrency markets as the rates of bitcoin nosedived as much as 10 percent prior to supporting near its 5-month low at the 7400 levels. While lots of have actually been concentrated on Facebook’s Mark Zuckerberg’s Libra pitch in the United States Congress, Google’s “quantum supremacy” claim might likewise remain in play. While bitcoin’s down pressure might continue the short-term, did the current cost corrections modify the long-lasting view of the crypto? Some experts think that bitcoin is still at a risk-off stage in spite of completion of “crypto winter season”. Can the VIX inform us more about how to have fun with the marketplace belief?

Bad however Not That Bad

It was another difficult week for cryptocurrency traders as the rates of bitcoin dropped to a fresh 5-month low. Bitcoin quit the October pattern line assistance and the 250- day moving average after the plunge on Wednesday. The crypto has actually been remaining above that moving average considering that early April. OKEx Technicals think that it’s still not a huge issue if bitcoin can hold its assistance at around the 7200 levels.

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Figure 1: BTCUSDT Daily Chart ( Source: OKEx; Tradingview)

While some bitcoin bears have actually been considering on the 5000 levels, our information reveals that bearish belief appears to stay undamaged. OKEx’s BTC Quarterly Futures have actually been trading at a discount rate to the area cost after the selloff on Wednesday (figure 2), it’s thought about as a timeless sign that traders were still bearish on BTC, and anticipate the cost to be lower than its existing cost by the quarter-end (December).

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Figure 2: BTC Quarterly Futures Traded at Discount Rate ( Source: OKEx)

What lags the Plunge?

There were a couple of macro occasions that struck the wire at the time of the cost actions that took place, while lots of believe that the United States Congress’ apprehension over Facebook’s Libra was among the significant elements, Google’s newest statement on its development in quantum computing is a concern that crypto watchers can’t pay for to disregard.

In the science publication Nature, Google claimed that its researchers have actually attained “quantum supremacy”. The report stated in one test, its quantum computer system processor had the ability to finish a complicated mathematical issue in simply 200 seconds. The very same issue would have taken the world’s fastest supercomputer 10000 years to finish. While computer system giant IBM has actually currently cast doubt on Google’s claim, and the innovation is still far from any significant industrial application, some experts fret that quantum power might break bitcoin’s cryptography, possibly endangering the leading cryptocurrency. On the other hand, numerous critics argue that Google’s quantum device didn’t consist of appropriate computing power to break bitcoin’s algorithms. Nevertheless, long term bitcoin HODLers need to put a close eye on this entire quantum advancement, although it stays in a preliminary phase, we anticipate this concern will continue to remain in the crypto markets. However it’s uncertain how markets would price in “quantum discount rate” on cryptocurrencies.

VIX Informs

Determining market belief is another secret when it concerns riding on top of the marketplace. In our previous publication “A Tale of Two Assets”, we evaluated that the bullishness in equities markets is needed to fire up the risk-on side of bitcoin. Yet, Thomas Lee, Co-Founder and Handling Director and Head of Research Study at Fundstrat Global Advisors, believes that bitcoin is still in risk-off mode after this week’s sell-off. We might include another layer of measurement if we put this theory in the context of the VIX.

The CBOE VIX Index evaluates the volatility of the S&P 500, it’s commonly thought about as a dependable sign of the marketplace’s threat cravings. The VIX normally hovers at around 15 and has actually mainly remained above that level considering that2018 So, 15 might be a belief watershed, anything above 15 might suggest risk-off, and listed below 15 might suggest risk-on.

The chart listed below programs the VIX (green line) and bitcoin (yellow line). Surprisingly, when the VIX is listed below 15 (shown in red line), bitcoin mainly would reveal an unfavorable connection with the VIX (red boxes). When the VIX is above 15, bitcoin would move to a typically favorable connection with the VIX (blue boxes).

It deserves keeping in mind that although the VIX presently is at around 13, appears that the VIX hasn’t been remaining listed below 15 enough time for bitcoin to respond, it will be fascinating to see if the risk-on belief in the equities markets can be sustainable, and might overflow to bitcoin.

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Figure 3: Bitcoin vs VIX YTD Chart ( Source: Tradingview)


The cryptocurrency markets have actually revealed preliminary healing after the sell-off on Wednesday. Although some critics blame the difficult position from United States legislators over Libra, Google’s quantum development might be a significant factor behind, and possibly might move the macro belief on the more comprehensive cryptocurrency markets over the long term. In the short-term, the worldwide equities markets have actually been tilting towards the risk-on side for a while, and more equities bullishness might assist bitcoin to switch on its risk-on mode.

 About the Author:  The author of this post is Cyrus Ip - Research Study Expert at OKEx.
 This post initially appeared on OKEx Blog site. Read more

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