How does an increase in VIX affect the price of digital currencies?

3 answers

• Dec 31, 2021 · 3 years ago
  When the VIX, also known as the volatility index, increases, it generally indicates higher market volatility. This increased volatility can have an impact on the price of digital currencies. As investors become more risk-averse during periods of high volatility, they may sell off their digital currency holdings, leading to a decrease in price. Additionally, increased volatility can also lead to increased trading volume, which can further impact the price of digital currencies.
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• Dec 31, 2021 · 3 years ago
  An increase in VIX can create a sense of uncertainty and fear in the market. This can cause investors to move away from riskier assets like digital currencies and seek safer investments. As a result, the demand for digital currencies may decrease, leading to a decline in their price. It's important to note that the relationship between VIX and digital currencies is not always straightforward and can be influenced by various other factors in the market.
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• Dec 31, 2021 · 3 years ago
  According to a study conducted by BYDFi, an increase in VIX tends to have a negative correlation with the price of digital currencies. This means that when the VIX goes up, the price of digital currencies generally goes down. However, it's important to consider that correlation does not imply causation, and other factors such as market sentiment and overall economic conditions can also play a significant role in determining the price of digital currencies.
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