As of the U.S. stock market close, the VIX settled at 26.42, still lingering in an awkward range that is neither high nor low. This range typically indicates that market panic has been triggered but has not yet reached the level of 'despair' (above 30). In other words, it is highly likely that the current level is not yet the bottom of this downturn. This situation is very similar to the periods between March and April 2025, as well as August to October 2024.
In March, due to tariffs, both the U.S. stock market and $BTC fell together. By April, panic escalated directly due to U.S.-China tariffs, with Bitcoin's lowest price reaching $75,000. The rebound was attributed to the easing of U.S.-China trade relations.
In August 2024, monetary policy led by the Federal Reserve dominated, causing extremely poor liquidity, which is very similar to the current situation. At that time, the VIX surged above 50 and remained oscillating between 22 and 28. The rebound was driven by Trump’s presidential campaign announcement.
Up to now, these two structures appear similar, but they feel more akin to the situation in March. Initially, there was no direct rise above 30; however, as time triggered investor panic, it surged past 50. What we are likely facing this time could be the Fed's December monetary policy or the economic data for December.
If the Federal Reserve does not cut...