Deutsche Bank analysts published a special statement to its customers on Friday, January 19.
They believe that there is a correlation between the price of bitcoin (BTC) and the CBOE volatility index (VIX), also known as the “fear index” on wall street.
Masao Muraki, financial strategist at Deutsche Bank, together with two colleagues Hiroshi tori and Tao Xu, said in a statement that the absence of fluctuations and volatility in the stock market encouraged investors to look for money elsewhere.
Because of the growing interest of institutional investors towards more risky investments such as cryptocurrencies, says Murakami, correlation between the price of bitcoin and the “index of fear” has increased dramatically:
Now a growing number of institutional investors are watching the cryptocurrency and focus on them as a kind of indicator for assessing the sustainability of asset prices. In the result of institutional investors to assess the assets, using financial analysis, analysis of strengths and weaknesses and other traditional methods of collection and analysis of information to really form an opinion about the market based on the prices of cryptocurrencies (which are formed mainly by retail investors).
The main point is that, while volatility in the stock market decreases, the price of BTC and other major cryptocurrencies will continue to grow, as investors will continue to work on the cryptocurrency market to earn money.
While the markets for traditional assets are now relatively predictable, the cryptocurrency market is hardly stable. At the end of 2017, the price of bitcoin has reached almost 20.000 thousand dollars, and now the price of BTC is on average 10.5 thousand U.S. dollars.