On December 18th, 2019, the stock market experienced a panic due to a 25 basis point Fed rate cut and Chairman Jerome Powell’s hawkish outlook. This led to Bitcoin (BTC) temporarily dropping below $100,000, causing a 3% decrease in US equities and a rise in the dollar index (DXY) to a two-year high of 108.
This pressure on currencies worldwide was reflected in the CBOE Volatility Index (VIX), which saw its largest one-day jump since February 5th, 2018, reaching 74%. Historically, significant spikes in the VIX have indicated local bottoms for both Bitcoin and the S&P 500. In fact, examining the top three one-day changes in the VIX, the first occurred on February 5th, 2018, when it surged by 116%.
On that day, Bitcoin dropped 16% to $6,891 but rebounded to over $11,000 within a few weeks. The second-largest spike in the VIX was on December 18th, 2019, registering a 74% increase. At press time, Bitcoin was trading above $102,000 while the S&P 500 futures indicated a positive open with a 0.37% gain.
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