Although past trends never guarantee future performance, volatility measures are widely known to revert to the mean. This cyclical nature suggests that periods of below-average volatility are often followed by greater turbulence, while above-average volatility sets the stage for market stability.
Currently, the index is trading below its 30-day and 200-day simple moving averages. Essentially, volatility is relatively “cheap” and within a historically reliable support zone, suggesting that the metric could be set to rise, leading to another round of turbulence.
For now, bitcoin continues to trade just above $64,000, keeping price action in a range that has persisted since last Wednesday. Although some analysts have noted two consecutive weeks of spot inflows into ETFs, the capital movement is minimal compared to the billions withdrawn from the market during the previous eight-week streak of outflows.
Global volatility indicators in traditional markets are currently offering mixed signals. South Korea’s KOSPI VIX currently sits above 70%, its highest level since the 1990s. Meanwhile, Wall Street’s VIX jumped more than 12% to 18% on Friday, where it continues to oscillate. However, these levels have been in play for months, meaning stocks are anything but panicked.
Additionally, the MOVE Index, the 30-day volatility indicator for U.S. Treasuries that underpins global finance, remains stable around 70%, as it has since April, providing a constructive indicator for risky assets. Stay vigilant!
