The correlation between Bitcoin and the VIX index has reached record highs, signaling the growing influence of traditional financial markets on cryptocurrencies.
Bitcoin and Market Volatility Correlation
The 90-day correlation of Bitcoin with the S&P 500 Volatility Index (VIX) has reached a record 0.88. This data, published by Coindesk on July 24, indicates an increasingly close relationship between cryptocurrencies and traditional markets.
Impact of Institutional Investors
Since early 2025, institutional investors have reportedly reduced Bitcoin's volatility by selling call options. This strategy may cause Bitcoin's price swings to align more closely with US stock market volatility.
[Markus Thielen] of 10x Research noted, "While I focus on volatility and options flows, I recommend consulting direct market data for accurate correlations between indices, and no exact values around 0.88 are confirmed as of now."
Analysis and Future of Bitcoin
Bitcoin's volatility index has declined from 67% to 42% over the past year, contrasting with a price increase of 26%. The increased correlation has drawn attention from analysts and traders, many of whom note the influence of institutional strategies on the cryptocurrency market.
Experts suggest that these changes could lead to a reshaping of hedging strategies in the crypto sector, while historical volatility trends and increasing regulatory scrutiny may influence long-term price stability for both crypto and traditional assets.
With current trends and the growing correlation of Bitcoin with traditional financial markets, changes in trading strategies of institutional investors may impact cryptocurrency volatility.
