How Can Traders Use the VIX Index as a Reference for Crypto Volatility?

The VIX, or Volatility Index, measures the stock market's expectation of volatility based on S&P 500 index options. While it is not directly related to crypto, traders often use it as a general gauge of market risk sentiment.

A high VIX indicates fear and uncertainty in traditional markets, which can spill over into the crypto market, often leading to higher crypto volatility. Some crypto-native indices, like the BitVol Index (Bitcoin Volatility Index), have been developed to serve a similar purpose specifically for the crypto market, providing a more direct measure.