A quiet summer for markets may be coming to an end. The Cboe Volatility Index (VIX) — often dubbed Wall Street’s “fear gauge” — has dropped sharply since April, touching a five-month low of 14.92 last Friday. But historical patterns suggest that August could bring a sharp reversal.
According to Barchart.com, the VIX has historically spiked in August more than any other month, gaining an average of 13.68% over the past 15 years and rising in 10 of those years, including a dramatic 135% surge in 2015.
This seasonal trend suggests that rising volatility could soon return to equity markets — and that may carry over into Bitcoin (BTC), which has increasingly tracked risk sentiment on Wall Street.
Currently trading at $117,658, Bitcoin has shown a growing correlation with the VIX and tech stocks over the past year. While the VIX tends to spike during periods of equity market stress, BTC’s 30-day implied volatility — a gauge of expected price swings — has also followed suit in past cycles.
However, since November, BTC’s implied volatility has been falling even as prices climbed, breaking its usual link with spot price action. Still, a VIX rebound in August could reignite turbulence in crypto markets, especially if broader risk assets come under pressure.
If the past is any indication, investors in both traditional and digital markets should prepare for elevated volatility as August approaches.
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