On CNBC’s Fast Money show Tuesday (May 29), Brian Stutland, president of Equity Armor Investments said that the way the investment market will move in the future may be indicated by Bitcoin’s own patterns and performances.
When it comes to investment markets, Brian Stutland knows a thing or two. As president of asset and wealth management specialists Equity Armor Investments, he is used to telling very rich people what to do with their money. In order to do this, he must have a high level of expertise on investment markets. Therefore, when Brian Stutland tells us that Bitcoin’s volatility or lack thereof is a perfect precursor to how the investment markets in general will perform, you better believe him.
Is Bitcoin The New VIX?
The CBOE Volatility Index, known by its ticker symbol “VIX”, is a popular measure of the stock market’s expectation of volatility. The index is sometimes referred to as the market’s “Fear Gauge.” On Tuesday, Brian Stutland was invited onto CNBC’s Fast Money program, and stated that in his opinion, Bitcoin is just as good of an indicator as VIX:
“Bitcoin is sort of becoming the new VIX,” said Stutland, “in sort of getting ahead of credit risk in the banking industry.”
“There is huge correlation right now between VIX and bitcoin 30 days ago, 30 trading days ago, that is starting to measure out credit risk in the market. That’s what cryptocurrency is becoming. It’s becoming a way to sort of de-risk yourself from credit risk in the banking industry.”
Because cryptocurrency is still a relatively unregulated way for investors to transfer capital, Stutland said that it makes sense that people will use it as a gauge and as a tool to move money, rather than an investment option, at least for the time being.
“Bitcoin is a way to for investors to basically move their money off the balance sheets of banks and into their own wallets,” he said. “Essentially storing their money under their pillow in the form of virtual currency.”
Traditional investors are also far more likely to be tentative with their capital when they feel the banks have increased their credit risks. As Stutland says:
“As credit risk increases we get more volatility in the market, which makes for a god buying opportunity.”