Bitcoin Halved... 'Fear Index' Seven Times That of Stocks

by Paek Jongmin

Published 24 May.2021 11:38(KST)

Fear Index at 130 Compared to Stocks... S&P 500 Stands at 20
Proven by Significantly Higher Cryptocurrency Volatility Compared to Stocks

Bitcoin Halved... 'Fear Index' Seven Times That of Stocks

[Asia Economy New York=Correspondent Baek Jong-min] An analysis has emerged that the sharp decline in Bitcoin is surpassing the records of the U.S. stock market over the past 30 years.

Bloomberg reported on the 23rd (local time) that if the recent Bitcoin situation is applied to the stock market, the 'Fear Index (VIX)' would be at the level of 130. This is nearly 50% higher than the VIX level of 85 during the U.S. stock market crash amid the COVID-19 outbreak in March last year.

The Chicago Board Options Exchange (CBOE) VIX, also called the Fear Index, began trading in 1993. The VIX has never exceeded 100 even during the 2008 financial crisis and the COVID-19 crisis last year. A high VIX indicates market anxiety, while a low VIX indicates stability.

This exemplifies that the recent Bitcoin plunge represents a level of fear that stock market investors have never experienced.

On the 20th, the VIX closed at 20.15. Reflecting this, Bloomberg's analysis suggests that the current Bitcoin VIX is about seven times that of the S&P 500 index. Although the New York stock market has also been highly volatile recently due to inflation concerns, it is difficult to even mention volatility compared to Bitcoin.

Bitcoin's volatility was even greater than that of exchange-traded funds (ETFs) that track oil price fluctuations at twice the rate. On the 19th, Bitcoin showed extreme volatility of up to 30% both up and down, bewildering investors. Stocks do not trade on weekends, but Bitcoin trades 24 hours a day. Due to such high volatility, investors cannot take their eyes off it even for a moment. Bitcoin recorded a 16% drop even on the holiday of the 23rd.