Finance & Markets

Are Virtual Currencies The Dictating Factor Behind Market Volatility?

Bitcoin, the virtual currency, is now gaining importance in showing the direction of credit risks in the market.

The CBOE Volatility Index has been the measuring rod through the S&P stock options. But recently, bitcoins are taking up this position, as the correlation between the VIX and bitcoins are seen to be high.

As credit increases, the volatility increases in the market. When banks increase their credit risks, bitcoins are taken off from banks which increase volatility in the market.

Bitcoins were at a high of around 20,000 in December, after which it fell to $6,000. But now it is trading at $7,413.84 and seems to be on the rebound. Earlier, it fell down to touch the May lows and has rebounded.

Wall Street analysts now feel that the price of bitcoins plays an important role in the market movement. When the Bitcoin prices fall, the markets equities fall. So do the bonds that are high-yielding. But when Bitcoin moves, so do the equities and bonds.

The digital currency is being controlled by the public, showing the decentralized strength of the masses.

Euro is currently seeing a lot of pressure from the Italian crisis. Italian bonds have sold off and bitcoins are becoming attractive in the European market.

The crypto-currencies are seen as the catalyst on which the markets are currently rallying feel analysts. Bitcoins are seen as a safe haven against the risk-filled markets.

The banking industry with its high risks is seeing a movement away from their balance sheets, as bitcoins are easy to store as virtual currencies.

Tuesday say the volatility index shot up to 18.39, though it was low on Fridays close at 12.59. The major indexes were seen to close low. Bitcoin has also recorded a low of $7500, which is far from its high of $10,000 a few months back.

Vipin Shettigar

With more than 5 Years of experience in the field of energy and resources, Vipin also is a source of Industry news from technology and media domains. With his jolly nature and humor, Vipin always cheers up the team when in stress and load. Surely, he has turned out to be an essential factor of the team. He likes hanging out with his friends in his spare time.

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