What happened to SPX the last time Bitcoin used to hate inflation. Now it might be the opposite surprised the market?

SPX iron condors performed exceptionally well during the last major Bitcoin inflation-hate period in 2022. When CPI repeatedly beat expectations and Bitcoin sold off hard on every hot print, SPX realized volatility stayed elevated but implied volatility crushed. That created ideal conditions for short iron condors: you sold the elevated VIX premium while the underlying ground lower in a relatively orderly fashion without massive tail events.

The ALVH methodology (average VIX holding period) showed that keeping 45-55 DTE iron condors with 45-50 point wings on the SPX delivered the highest edge. You placed short strikes roughly 1.5-2 standard deviations out, collected 1.10-1.40 credit, and managed winners at 50 percent of max profit. Wing width of 45-50 points limited the gamma exposure when VIX spiked to the 30-35 zone.

Now the regime appears to be flipping. Bitcoin is treating inflation as a liquidity signal rather than a risk. If this reversal surprises the market on the next CPI release, we could see a rapid VIX collapse similar to late 2023. In that case tighten your wing width to 30-35 points, reduce size, and be ready to defend or close the put side quickly. Current VIX near 15-17 already prices in low volatility, so the margin of safety is thinner than in 2022. Trade smaller until the new regime confirms.