Low securities volatility forces investors to go for cryptocurrencies – Deutsche Bank
A Deutsche Bank analyst drew the attention of his clients to the growing relationship between the price of bitcoin and the volatility index of the Chicago Options Exchange (VIX), also known as the Wall Street Fear Index. He wrote about this last Friday.
Masao Muraki, global strategist at Deutsche Bank, together with two colleagues, notes that low returns and volatility in the securities markets are driving investors to look elsewhere for earning opportunities..
As institutional investors pay more attention to risky propositions such as cryptocurrencies, Muraki writes that “the correlation between bitcoin and the VIX has increased tremendously.”.
“A growing number of institutional investors are starting to look at cryptocurrencies as the limit of acceptable risk when assessing the balance of asset prices. As a result, institutional investors, who must value assets using deep financial knowledge, analysis and intelligence gathering strengths, are actually waiting for feedback on cryptocurrency prices (which are largely determined by individual investors), ”he writes..
According to Muraki, while the volatility in the securities markets continues to fall, the same indicator for the price of bitcoin and other large cryptocurrencies will continue to grow, because investors will go to the cryptocurrency market for money..
While traditional markets continue to perform quite predictably, the same cannot be said for digital asset markets. Thus, bitcoin, which crossed the $ 20,000 mark in mid-December, has since lost about half of its value and is trading around the $ 11,700 level at the time of publication..
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