How Bitcoin Is Reacting To The Falling S&P 500 Volatility Index: Expert

It’s barely weeks into the second half of 2025, and it is fair to say that the Bitcoin and global financial markets have almost seen it all this year. From global trade wars to actual disputes between nations (involving serious military action), the markets have been subject to different forms of external pressure throughout the year.

As a result, the world has seen a sheer amount of correlation and direct relationship between the traditional financial markets and the crypto market. While the US equities market and Bitcoin have not particularly moved in tandem in recent months, there is no denying the existence of a relationship between the asset classes.

What Does The Falling Traditional Volatility Mean For BTC?

In a new post on social media platform X, Alphractal CEO and founder Joao Wedson delved into the relationship between Bitcoin and the US equities market (through the S&P 500 index). According to the crypto expert, the premier cryptocurrency is exhibiting low correlation with the CBOE Volatility Index (VIX), which tracks the market’s expectations for the volatility of the S&P 500 Index.

For context, volatility refers to how quickly prices change within a short period and is often seen as a way to gauge market sentiment. Wedson mentioned that the VIX Index, also known as the fear index, is widely used as a risk thermometer among participants in the traditional financial markets. 

According to Wedson, the price of Bitcoin historically tends to move more independently and significantly in the following year whenever it is negatively correlated with the S&P 500 Index, especially during periods of low VIX. This increased volatility has often translated into significant price rallies in the past, according to the analyst.

Wedson said:

In other words: don’t waste hours analyzing BTC vs. S&P 500 when BTC’s correlation with the VIX is low or negative — that’s usually when BTC has a higher chance of entering an explosive phase.

The on-chain analyst said that on the flip side, when the VIX is high, it is worth looking at the relationship between Bitcoin and US equities markets, as fear in the latter can influence the behavior of the former. However, Wedson noted that the VIX is currently declining, and as such, the S&P 500 Index might not offer much help in analyzing Bitcoin’s next move.

Wedson concluded that the more BTC dissociates from traditional volatility (VIX), the stronger it is as an independent asset. Ultimately, this could be a positive sign for the Bitcoin price and present fresh opportunities for investors looking to get into the market.

Bitcoin Price At A Glance

As of this writing, BTC is valued at around $117,888, reflecting no significant price movement in the past 24 hours.