Analysts rely on a variety of tools to tip them about upcoming pricing action, with some offering better results than others. A tool for top and bottom cutting that is used to call the top of 2007 in the stock market raises a red flag again. Therefore, this may also be bearish for Bitcoin and the rest of the Crypto Currency market.
Stock exchange raises warning sign “red flag”, analyst warns of “imminent reversal”
The stock market is pumping today on Jerome Powell’s monetary policy speech, while Bitcoin price is thankful.
The S&P 500 sets another daily high all the time even as the economy struggles, unemployment rises, GDP shrinks, and the pandemic rises.
Most signs indicate that the stock market is in a bubble that is ready to burst. However, incentive money has held the shares down to outrageous valuations.
Related reading | Why Bitcoin Ditching Stock Market Correlation For Gold Bullish For BTC
But as the stock market picks a new high, it has made a clumsy deviation 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 the timing of the peak of 2007 prior to the Great Recession, and the bottom of 2009 when things finally started to turn around.
The signal is back, and it could end up with Bitcoin and the rest of crypto hurt as it shatters the stock market.
Volatility Index (VIX) Impact On Bitcoin (BTCUSD) & S&P 500 (SPX) | Source: TradingView
Bitcoin Bulls Beware: Crypto last crashed VIX destroyed stocks
The crypto bubble is long in the past, but the larger bubble of financial markets continues to inflate.
The stock market has already fully recovered from the Black Thursday low and set a new very high on most major indices.
That day, Crypto was suddenly tightly correlated with stocks, and Bitcoin flashed by more than 50% alongside the S&P 500, gold, and almost all other assets.
The correlation with Bitcoin turned from equities to gold, helping the whole crypto-market cap to its first sustainable recovery. But that may now be dangerous, due to a bearish deviation on the VIX index.
Related reading | This tool has named almost every Bitcoin top, and it has just been reactivated
According to Felder Report author Jesse Felder, the “VIX warning signal flashes again as earlier this year.” “In short, the options market is sending a message that forward volatility 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 impact on overall market volatility. And this is why the same signal also poses a threat to Bitcoin.
