When Volatility Wakes Up
Description
Markets finally received the wake-up call they had been ignoring. After a couple of weeks of relatively low volatility, a 25.68% spike in the VIX to 20.65 on Friday gave it to us –- its biggest one-day move in more than six months.¹ Stocks paid the price: The S&P 500 dropped about 2.4 %, the Dow lost 2.7 % and the Nasdaq was down 2.5 % on the week. The reversal erased gains during the week and breadth was worse, leaving small-caps still struggling.
Crypto joined the selloff. Bitcoin, which surged earlier in the week, stabilized around $114,000; Ethereum tumbled to near $3,800 (about a 7 % dive from peak levels) following leveraged liquidations.² The magnitude of the decline in digital assets underscored how vulnerable speculative positioning had become particularly as risk aversion spreads.
United States
