The so-called Bitcoin (CRYPTO: $BTC) “fear indicator” has risen 20% in the past 24 hours as investors become increasingly concerned about the accelerating selloff in cryptocurrencies.
Known as the BVIV index, the fear indicator measures Bitcoin’s 30-day implied or expected volatility. It has increased by 20% in the last day to reach 46.45%.
That rise in the BVIV index is the largest single-day increase since February 5, when the crypto market suffered a considerable drop.
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At midday on June 3, BTC was trading just below US$66,000 as downward pressure continues to be placed on digital assets.
Bitcoin (BTC) has fallen 10% in the last seven days, even as US stocks hit all-time highs.
The fear indicator jumps again after two months of relative calm. The price of BTC rose in March and April of this year before falling a modest 4% in May.
However, sales of Bitcoin and other cryptocurrencies such as Ethereum (CRYPTO: $ETH) have accelerated since June. In the last 24 hours, BTC has fallen by 6%.
The BVIV index, which rose 20%, indicates that retail investors are likely to head to the exits, adding to selling pressure.
At the same time, traders are likely to aggressively buy options to protect against further downside risks in cryptocurrencies.
On February 5 of this year, the BVIV index rose more than 50% in one day, surpassing 90%, when Bitcoin fell to US$60,000, its low for the year.
Some analysts and prediction markets are now predicting that the price of Bitcoin could fall to $50,000 amid the current sell-off.
Many investors are also concerned about the growing divergence between stocks and cryptocurrencies, which have historically moved in tandem.
However, cryptocurrencies are now sinking as stocks hit successive all-time highs.