A new statistical evidence has emerged, which suggests that the dynamics of the Bitcoin market (BTC) is now intricately linked to flow and flow in Wall Street.
Recently, the 90 -day correlation coefficient between the implicit volatility indices of 30 days of Bitcoin, Bviv de Volmex and Dvol of Delibit, and the S&P 500 VIX reached a record of 0.88, according to the commercial vision of the data source.
A positive correlation of 0.88 indicates that the two variables are closely tied. Until Wednesday, the correlation was 0.75. The VIX represents the implicit or expected price turbulence of 30 days in the Wall Street capital index, the S&P 500.
The strengthening correlation suggests that BTC implicit volatility rates are evolving towards fear meters, similar to Vix, which generally falls during bull races and increases during liquidations.
The Bvis has crashed from approximately 67% to 42% this year, moving in the opposite direction to the price of BTC, which has increased by 26%. Historically, BTC and its implicit volatility tended to move together. Meanwhile, the VIX has fallen 11% this year, while the S&P 500 index has gained more than 8%.
According to Markus Thielen, founder of 10x Research, the growing institutional participation in the cryptographic market, characterized by volatility vendors, is behind the collapse in the implicit volatility in BTC and the recorded correlation resulting with the VIX.
The sale of volatility implies writing calls outside money (OTM) to generate additional income in addition to the holder of the spot market. Some merchants also write OTM.
“This Bitcoin cycle continues to be dominated by the participants of Wall Street, who are actively compressing volatility,” Thieen told Coindesk.
“Instead of directionally speculate, many institutional players are selling purchase options to generate additional yield, alabrar traditional capital income strategies. As a result, addressing flows tend to follow a broader dynamic of risk/family risk for inherited markets,” Thien added.
Thielen added that the institutional framework has contributed to the growing BTC correlation with US actions “, particularly as the coverage funds and asset administrators increasingly apply the same macro play book in both classes of assets.”
Read: Bitcoin’s low volatility rally from $ 70k to $ 118k: a transition story of Wild West A Wall Street dynamics
