The VIX surged yesterday to levels we haven’t seen since mid-October, signalling the markets' fear.
Implications spanned across stocks, crypto and commodities. But is this a buy the dop or something bigger?
WHY the VIX Exploded
Several key narratives are in motion:
Markets are retreating from risk assets amid renewed uncertainty around the Federal Reserve’s policy path. Rate-cut odds have slipped sharply, unnerving sentiment.
The delayed data fallout from the government shutdown has left economic readings patchy and trust in the outlook weakened.
Tech and crypto are under pressure (especially AI names), triggering equity rotation.
Markets Impacted
The US stock markets felt the squeeze, as traders usually sell their positions in times of uncertainty.
Bitcoin is heading towards $80k, which are the lows formed in April of this year. This is one of the ultimate fear and greed markets for me. An unregulated market will often see a stronger performance in greed driven markets.
Gold is muted, which often occurs in times of uncertainty, typically we see a short sell off as traders liquidate their positions to cover losses elsewhere.
How Traders Use the VIX
When VIX spikes but then drifts lower gradually while risk assets stabilise, dips in equities or currencies often do become buying opportunities. This was one of the top strategies I have used this year.
If VIX jump is sustained it may signal the start of a bear phase so buying the dip becomes risky.
We’ve got a sharp VIX move, tech crack, policy confusion and a big macro calendar ahead. That context tilts toward risk-off continuation risk rather than a clean dip-buy setup, so for me this narrative may not be over just yet.