The VIX index, widely recognized as Wall Street’s “fear gauge,” recently surged to 39, marking its highest level since October 2020. This spike in volatility expectations can largely be attributed to geopolitical events, specifically China’s announcement of retaliatory tariffs on the U.S..
The ramifications of such news reverberated through the financial markets, causing a significant sell-off in U.S. stock-index futures. As a result, traders have recalibrated their expectations regarding Federal Reserve interest rates, now estimating cuts of up to 116 basis points this year, an increase from the previous estimate of 100 basis points prior to the tariff announcement, according to CME’s FedWatch tool.
In the realm of cryptocurrencies, Bitcoin (BTC) reflected the overall market uncertainty, trading 0.7% lower at $82,500 at the time of this report. Following earlier highs above $84,600, Bitcoin’s trading dynamics have been influenced by the changing market sentiment. Furthermore, Bitcoin’s 30-day implied volatility, indicated by Deribit’s DVOL index, has also risen to an annualized rate of 54.6%, the highest level seen in two weeks.
