Good morning everyone and welcome to our Chart of the Week series! Every week we provide you with one of the most informative Bitcoin charts, sent directly to your inbox. This week we dive into Bitcoin’s correlation with Nasdaq and the CBOE Volatility Index (aka the “VIX”).

Another week of volatility has many wondering what’s in store for bitcoin next. Just in the past week, bitcoin price has been as low as $74,000 and as high as $95,000 - a 20% range in just one week!

As usual, it’s important to look to the Nasdaq and broader US equities complex to see what the general risk-sentiment is. The Nasdaq is down marginally, over the past week, losing less than 1% and the 10yr bond yield is up marginally from last Friday.

Nasdaq vs Bitcoin

There was a significant move in bitcoin’s price off of news of a ‘crypto reserve’ last Friday, but remained largely correlated with a move up in the Nasdaq. In fact, by the market close on Monday, the entire move had been negated, with sellers bringing the price back down to the pre-announcement price.

This was disheartening, but understandable once you see that Monday was quite a bad day for the Nasdaq, with it losing almost 3% in quite a rough day for risk-assets. The good news, is that bitcoin appears to be outperforming the Nasdaq over the past couple of days:

The VIX (Yet Another ‘Tradfi’ Measure)

The VIX is a metric used to track the implied volatility of S&P options and is otherwise known as the “fear gauge”. Higher VIX readings do not inherently require lower risk-asset prices, but generally correlate to headwinds for risk-assets. Generally speaking, higher VIX levels usually correspond with downward price volatility.

The VIX has remained elevated over the past week, gaining ground. Usually, when the VIX is trending upward, this can correlate to large headwinds in risk-assets, but bitcoin has held up quite well despite this.

Tariffs

One of the large drivers of the moves in risk-assets this week has been tariffs. While this has caused the Nasdaq and broader risk-assets to sell off, we think it’s actually a bullish indicator for bitcoin in the long-term view.

Tariffs, at their core, are the very antithesis of ‘free and fair trade’. Tariffs are objectively, aggressive actions that one country takes to address imbalances in the global economy. These imbalances only occur due to fiat currency and the global dollar system. In a world with sound money, these imbalances are balanced out by moves in currencies. However, this release valve is broken, given the dollar and its reserve status.

Clearly, bitcoin is one such solution to an a world in which tensions appear to be ever-increasing and countries cannot trust fiat currencies any longer. Once you also realize that several key policy makers within the Trump administration appear to understand Triffin’s Dilemma and Dutch Disease, the probability of this dollar system ending increases substantially.

Summary

As we noted last week, bitcoin remains attractively priced given the macroeconomic backdrop. Growth concerns may continue to weigh on bitcoin, given it is very liquidity sensitive and high beta to risk assets, but the long-term thesis (which we’ve reiterated below) remains intact:

It is worth mentioning that these annual flows represent trillions of dollars. Even if only a small fraction of surpluses are stored in bitcoin, this still represents trillions of dollars’ of capital flowing into bitcoin’s ecosystem every single year.\

We know bitcoin is a ~$2 trillion market, making this size of capital flows notable in the global landscape. However bitcoin (like most markets) remains priced at the margin, so these flows could easily support major increases in Bitcoin’s price from current levels.

That’s it for this week - remember to stay humble out there folks and continue stacking sats!