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'Wall Streetization' of Bitcoin: BTC Volatility Index and the S&P 500 VIX Boast Record 90-Day Correlation
The correlation between BTC's implied volatility indices and the S&P 500 VIX recently hit a record 0.88.
Updated Jul 24, 2025, 6:38 a.m. Published Jul 24, 2025, 6:10 a.m.
What to know:
- Bitcoin's market dynamics are now closely linked to Wall Street, with a record-high correlation of 0.88 between BTC's implied volatility indices and the S&P 500 VIX.
- The correlation suggests BTC's implied volatility indices are becoming fear gauges similar to the VIX, which fluctuates with market sentiment.
- Institutional participation in the crypto market, characterized by volatility selling, is driving the increased correlation with U.S. equities.
New statistical evidence has emerged, suggesting that bitcoin's market dynamics are now intricately linked to the ebb and flow on Wall Street.
Recently, the 90-day correlation coefficient between bitcoin's 30-day implied volatility indices – Volmex's BVIV and Deribit's DVOL – and the S&P 500 VIX hit a record high of 0.88, according to data source TradingView.
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A positive correlation of 0.88 indicates that the two variables are closely tied. As of Wednesday, the correlation stood at 0.75. The VIX represents the 30-day implied or expected price turbulence in Wall Street's equity index, the S&P 500.
The strengthening correlation suggests that BTC's implied volatility indices are evolving into fear gauges, similar to the VIX, which typically falls during bull runs and rises during sell-offs.
The BVIV has crashed from roughly 67% to 42% this year, moving in the opposite direction of BTC's price, which has risen by 26%. Historically, BTC and its implied volatility tended to move in tandem. Meanwhile, the VIX has dropped 11% this year, while the S&P 500 index has gained over 8%.
According to Markus Thielen, founder of 10x Research, growing institutional participation in the crypto market, characterized by volatility sellers, is behind the collapse in BTC implied volatility and the resulting record correlation with the VIX.
Volatility selling involves writing out-of-the-money (OTM) calls to generate an additional income on top of the spot market holdings. Some traders also write OTM puts.
"This bitcoin cycle continues to be dominated by Wall Street participants, who are actively compressing volatility," Thielen told CoinDesk.
"Rather than speculating directionally, many institutional players are selling call options to generate additional yield—mirroring traditional equity income strategies. As a result, directional flows tend to follow broader risk-on/risk-off dynamics familiar to legacy markets," Thielen added.
Thielen added that the institutional framework has contributed to BTC's growing correlation with the U.S. equities, "particularly as hedge funds and asset managers increasingly apply the same macro playbook across both asset classes."
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