It’s been a rough year for the cryptocurrency sector, but it appears that things are looking up thanks to spot bitcoin ETF filings on the part of BlackRock, Invesco, and WisdomTree towards the end of June. However, experts warn that digital token traders need to remain on their guard as a number of standard market indicators are pointing towards risk aversion in the near future.
Nevertheless, traders expressed their enthusiasm over the filings by driving up the value of Bitcoin by over 20%. As of press time, Bitcoin was being traded at $30,070 per token.
It should also be noted that Bitcoin has rallied along with stocks over the past few months, even as the Treasury Department opted to use its cash balance to improve overall liquidity after the government hit its debt limit.
DeFi and TradFi Remain Connected
But if there is anything that analysts have learned over the past few years, it’s that decentralized finance (DeFi) should never truly be disconnected from traditional finance (TradFi) for too long. This is because any notable movement in the stock market as well as in risk assets, will affect sentiments within the digital token sector.
This is illustrated in the Cboe Volatility Index (VIX), which essentially serves as the fear gauge for much of Wall Street. According to Tom McClellan, an analyst and editor for The McClellan Report, there is currently a high spread between the pricier futures listed on VIX and the index itself – a sure sign of top prices.
The current reading is well above 60% and results from the VIX dropping too far below its futures contracts, meaning that stock traders are riding high with optimism. However, VIX showed a similar reading back in January – right before stocks began plunging from all-time highs.
