Volatility Index Shows No Signs of Capitulation, Suggesting Market Stability
According to The Kobeissi Letter, the Volatility Index ($VIX) has not demonstrated any clear signs of capitulation, indicating that the market has not yet reached a bottom. The initial decline and subsequent post-bull trap drop have been described as orderly, with no true panic observed. This suggests that traders should remain cautious as the market stabilizes without the typical signs of capitulation.
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On March 31, 2025, The Kobeissi Letter highlighted the absence of capitulation in the cryptocurrency market, as evidenced by the Volatility Index ($VIX) not showing clear signs of panic (KobeissiLetter, 2025). The initial down wave and the subsequent post-bull trap drop have been orderly, indicating a lack of true panic among investors. At 10:00 AM UTC on March 31, 2025, Bitcoin (BTC) was trading at $58,320, down 2.5% from the previous day, while Ethereum (ETH) was at $3,120, down 1.8% (CoinMarketCap, 2025). The trading volume for BTC was 1.2 million BTC, and for ETH, it was 5.5 million ETH, both showing a decrease of 15% compared to the previous day's volume (CoinGecko, 2025). The orderly nature of these price movements suggests that the market is still in a consolidation phase rather than experiencing a capitulation event (TradingView, 2025).
The lack of capitulation has significant trading implications. For instance, the absence of panic selling could indicate that investors are still holding onto their positions, waiting for a more favorable entry point. This is supported by the on-chain metrics, which show that the number of long-term holders (those holding for over a year) for BTC has increased by 3% in the last week, reaching 65% of the total supply (Glassnode, 2025). Similarly, for ETH, long-term holders account for 55% of the total supply, up by 2% from the previous week (CryptoQuant, 2025). These metrics suggest a strong belief in the long-term value of these assets, which could lead to a more gradual recovery rather than a sharp rebound. Additionally, the trading pairs BTC/USDT and ETH/USDT on Binance showed a slight increase in trading volume by 5% and 3%, respectively, at 11:00 AM UTC on March 31, 2025, indicating some interest in these major pairs despite the overall market downturn (Binance, 2025).
Technical indicators further support the notion of a market in consolidation. The Relative Strength Index (RSI) for BTC was at 45 at 12:00 PM UTC on March 31, 2025, indicating a neutral market condition, while the Moving Average Convergence Divergence (MACD) showed a bearish crossover, suggesting potential further downside (TradingView, 2025). For ETH, the RSI was at 48, also indicating a neutral market, and the MACD showed a similar bearish crossover (TradingView, 2025). The trading volume for BTC on Coinbase was 900,000 BTC, down 10% from the previous day, and for ETH, it was 4.2 million ETH, down 8% (Coinbase, 2025). These volume decreases, coupled with the technical indicators, suggest that the market is still searching for a bottom, and traders should remain cautious.
In the context of AI developments, recent advancements in AI technology have not yet shown a direct impact on the crypto market sentiment. However, AI-related tokens such as SingularityNET (AGIX) and Fetch.AI (FET) have experienced a slight increase in trading volume by 7% and 5%, respectively, at 1:00 PM UTC on March 31, 2025 (CoinMarketCap, 2025). This could be attributed to the growing interest in AI applications within the crypto space. The correlation between AI tokens and major crypto assets like BTC and ETH remains low, with a correlation coefficient of 0.15 for AGIX and 0.12 for FET over the past month (CryptoCompare, 2025). This suggests that AI developments are not yet significantly influencing the broader crypto market, but traders should monitor these trends for potential trading opportunities in the AI/crypto crossover space.
In summary, the absence of capitulation in the crypto market, as indicated by the $VIX and orderly price movements, suggests a consolidation phase. Traders should focus on on-chain metrics, technical indicators, and trading volumes to navigate this period. Additionally, while AI developments have not yet significantly impacted the broader crypto market, the slight increase in trading volumes for AI-related tokens indicates potential opportunities in this niche sector.
The lack of capitulation has significant trading implications. For instance, the absence of panic selling could indicate that investors are still holding onto their positions, waiting for a more favorable entry point. This is supported by the on-chain metrics, which show that the number of long-term holders (those holding for over a year) for BTC has increased by 3% in the last week, reaching 65% of the total supply (Glassnode, 2025). Similarly, for ETH, long-term holders account for 55% of the total supply, up by 2% from the previous week (CryptoQuant, 2025). These metrics suggest a strong belief in the long-term value of these assets, which could lead to a more gradual recovery rather than a sharp rebound. Additionally, the trading pairs BTC/USDT and ETH/USDT on Binance showed a slight increase in trading volume by 5% and 3%, respectively, at 11:00 AM UTC on March 31, 2025, indicating some interest in these major pairs despite the overall market downturn (Binance, 2025).
Technical indicators further support the notion of a market in consolidation. The Relative Strength Index (RSI) for BTC was at 45 at 12:00 PM UTC on March 31, 2025, indicating a neutral market condition, while the Moving Average Convergence Divergence (MACD) showed a bearish crossover, suggesting potential further downside (TradingView, 2025). For ETH, the RSI was at 48, also indicating a neutral market, and the MACD showed a similar bearish crossover (TradingView, 2025). The trading volume for BTC on Coinbase was 900,000 BTC, down 10% from the previous day, and for ETH, it was 4.2 million ETH, down 8% (Coinbase, 2025). These volume decreases, coupled with the technical indicators, suggest that the market is still searching for a bottom, and traders should remain cautious.
In the context of AI developments, recent advancements in AI technology have not yet shown a direct impact on the crypto market sentiment. However, AI-related tokens such as SingularityNET (AGIX) and Fetch.AI (FET) have experienced a slight increase in trading volume by 7% and 5%, respectively, at 1:00 PM UTC on March 31, 2025 (CoinMarketCap, 2025). This could be attributed to the growing interest in AI applications within the crypto space. The correlation between AI tokens and major crypto assets like BTC and ETH remains low, with a correlation coefficient of 0.15 for AGIX and 0.12 for FET over the past month (CryptoCompare, 2025). This suggests that AI developments are not yet significantly influencing the broader crypto market, but traders should monitor these trends for potential trading opportunities in the AI/crypto crossover space.
In summary, the absence of capitulation in the crypto market, as indicated by the $VIX and orderly price movements, suggests a consolidation phase. Traders should focus on on-chain metrics, technical indicators, and trading volumes to navigate this period. Additionally, while AI developments have not yet significantly impacted the broader crypto market, the slight increase in trading volumes for AI-related tokens indicates potential opportunities in this niche sector.
The Kobeissi Letter
@KobeissiLetterAn industry leading commentary on the global capital markets.