Equity volatility

The VIX panel

The VIX panel surfaces three views of equity vol:

• Spot VIX, the headline 30-day SPX implied vol index, plotted over time.
• Term structure, VIX / VIX3M / VIX6M. The shape of the equity-vol curve. Backwardation (front > back) is the stress signal.
• VIX ratio, VIX / VIX3M. One number summary of the term structure shape. Above 1 = backwardation = stress.

VIX levels

• Under 13, historically calm. Compressed vol; risk-on tape; the "everyone is comfortable" regime. Often precedes vol expansion.
• 13-16, normal range. Most trading days.
• 16-22, elevated. Caution warranted.
• 22-30, stress. Risk-off in equities; crypto typically follows.
• Above 30, crisis. Major sell-offs, cascading liquidations across asset classes. Rare; doesn't persist long.

Reading the term structure

The shape of the curve carries more information than spot VIX alone:

• Contango (back > front), normal regime. Front-month vol is the cheapest; market expects more vol later. The default shape during quiet markets.
• Backwardation (front > back), stress regime. Market is pricing more vol now than later. Aligns with active sell-offs and active expectations of further downside.
• Sharp front-end kink (front-month VIX >> VIX3M), specific event being priced into the near term. Common ahead of FOMC, NFP, CPI prints.

How crypto reads VIX

Two thresholds to internalise:

1. VIX > 22 means risk-off in equities. Crypto longs need a strong micro setup to fight that backdrop. Default to caution.
2. VIX backwardation means equity vol traders are pricing immediate stress. This often coincides with crypto vol spikes too. Defensive positioning warranted.

The relationship isn't mechanical, crypto can ignore VIX during structural bull periods (ETF inflows, halving dynamics), but ignoring it entirely sacrifices a real directional input.