On December 18th, the stock market experienced a panic due to a 25 basis point Fed rate cut and Chairman Jerome Powell’s hawkish outlook. Bitcoin (BTC) briefly dipped below $100,000, while the S&P 500 fell about 3%. The dollar index (DXY) reached a two-year high of 108, causing further strain on global currencies.
The CBOE Volatility Index (VIX), a measure of market fear and expected volatility over the next 30 days, saw its largest one-day jump since February 5th, 2018, rising by 74%. This was only the second-largest increase in its history. Historically, significant spikes in the VIX have signaled local bottoms for both BTC and the S&P 500.
In fact, looking at the top three one-day changes in the VIX, the first occurred on February 5th, 2018, when it rose by 116%. On that day, BTC fell 16% to $6,891 but later rebounded to over $11,000 by February 20th. At press time, BTC was trading above $102,000, while the S&P 500 futures indicated a positive open with a 0.37% gain.
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