As risk appetite declines in the U.S. stock markets, the VIX index, which measures short-term volatility expectations, has surged to 39. This marks one of the highest levels observed since October 2020. New tariffs imposed by China on the U.S. have caused turbulence in global markets. The rising uncertainty is increasingly being felt in both traditional markets and the cryptocurrency sector.
VIX Index Signals Market Fear
The rise in the VIX index clearly indicates that investors harbor significant concerns about the market’s future. Known as the “fear index,” this indicator is closely monitored during volatile periods shaped by sudden news. The new tariffs that China has implemented in response to Washington have set the stage for this rapid increase in the index. Additionally, the declines seen in U.S. stock futures reflect this growing unease. The increasing selling pressure on Wall Street is strengthening investors’ tendency to avoid risk. The ascent in the index is fueled not only by tensions between China and the U.S. but also by rising uncertainties regarding global economic growth and interest rate policies.
Expectations for Fed Rate Cuts Increase
These developments in the financial markets have also altered expectations regarding the U.S. Federal Reserve’s (Fed) monetary policies. According to CME FedWatch data, the likelihood of a rate cut in 2024 has shifted from 100 basis points to 116 basis points. This increase is interpreted as a signal of a slowdown in the economy. An increase in expectations for a rate cut could spark hopes for a recovery in risk assets. However, the current landscape indicates that investors continue to exercise caution. Upcoming macroeconomic data from the U.S. and statements from Fed officials may further clarify these expectations in the near term.
Bitcoin Faces Volatility, Peaks at High Levels
The stress in global markets has also impacted the cryptocurrency sector. Bitcoin 
$81,867 experienced a 0.7% loss during the day, trading at approximately $82,500. This decrease underscores that Bitcoin has not been able to serve as a safe haven during periods of market uncertainty. The Deribit DVOL index, which measures Bitcoin’s expected volatility over 30 days, has reached an annual rate of 54.6%. This is recorded as the highest volatility rate in the past two weeks. For cryptocurrency investors, this level signifies a crucial period to monitor both opportunities and risks. The developments in the markets indicate that the search for safe havens is increasing, suggesting that volatility may continue in both traditional assets and cryptocurrencies. Experts believe that geopolitical risks and central bank policies will remain decisive factors in pricing over the coming weeks.
