- Bitcoin price held steady above $22,000 after the latest actions on SVB and Signature Bank.
- The VIX index has surged above $30 for the first time in months.
- The fear and greed index has plunged to the extreme fear region.
The VIX index staged a strong comeback on Monday as the volatility in the financial market continued. The closely-watched volatility index spiked by more than 23% and reached a high of $30.76, the highest level since October 24. It has soared by more than 80% from the lowest level this year. The fear and greed index, on the other hand, has moved to the extreme fear level of 21.
VIX index rally gains momentum
The CBOE VIX index is a closely-watched gauge that measures the amount of volatility in the financial market. It primarily uses options data in the S&P 500 index, which is the best-known financial index in the market.
In most periods, as I wrote here, a higher VIX index is usually bearish for stocks. In fact, futures tied to the S&P 500, Dow Jones, and Nasdaq 100 indices have all plunged in the premarket. Dow Jones has shed over 255 points while the tech-heavy Nasdaq 100 index has slipped by over 200 points.
Read more: How to buy Bitcoin.
This is a notable thing for cryptocurrencies because of the close correlation that exists between stocks and cryptocurrencies. In most periods, the stocks and cryptos tend to move in the same direction. On Monday, however, most crypto prices jumped, with BTC price soaring to $22,500. Cardano, MakerDAO, Synthetix, LOOM, and Liquity prices continued surging as well.
Meanwhile, the fear and greed index has moved to the extreme fear level of 21. This is much lower than the greed level of 69 where it was a month ago. Market momentum and stock price breadth have moved to the fear area while put and call options, VIX, safe haven demand, and junk bond demand have moved to the extreme fear area.
Bitcoin price prediction
The daily chart shows that the BTC price formed a small hammer pattern on Friday. The lower side of the hammer was at $19,585. Since then, the coin has risen in the past three days straight even as stocks with an exposure of crypto plunged. First Republic Bank plunged by more than 68% on Monday even after it received a bailout from JP Morgan and the Fed.
Bitcoin price has moved slightly above the 50-day exponential moving average (EMA). It has also jumped above the key support at $21,408, the lowest point on February 14. Still, I believe that this comeback is a dead cat bounce, which will see BTC retest last week’s low of about $19,500.
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