U.S. equity indexes once again pushed to record highs on Monday, with the S&P 500 rising for the fourth consecutive session to 6,519 points. The Nasdaq also reached new peaks, while the Dow Jones hovered near last week’s highs. Despite this bullish momentum in stocks, the crypto market lagged behind, with major altcoins under pressure.
Bitcoin, Ethereum, XRP, and Dogecoin Lose Steam
Bitcoin traded around $115,860, moving indecisively between $114,000 and $117,000. This range formed a Doji candle, reflecting investor hesitation after the August peak above $124,000.
Ethereum dropped from nearly $4,800 to $4,500, even though it is often dubbed the “internet bond” due to staking yields. XRP slipped back to the $3.00 mark after a brief breakout, while Dogecoin fell from $0.307 to $0.267, pressured by whale selling.
Why Are Markets Hesitating?
Several factors contributed:
Long-term Bitcoin holders are taking profits
Investors await the Federal Reserve’s rate cut decision
A 25-basis-point cut is widely expected, while a surprise 50-point move could spark a surge in stocks, crypto, and gold
VIX Sends Red Flags
While equities climbed, the VIX index — which measures expected volatility based on S&P 500 options — jumped over 6% to 15.68. This is unusual, as VIX and equities typically move in opposite directions. Historically, breaks in this negative correlation have often preceded corrections.
According to analytics platform Menthor Q, the move may reflect stronger demand for put options as traders hedge against potential downside. This suggests the market could be bracing for a pullback following the Fed’s decision.
Bitcoin Volatility on the Rise
Bitcoin’s implied volatility index from Volmex also rose by 3%, maintaining a positive correlation with the VIX. This is notable, as Bitcoin’s relationship with volatility indexes has shifted since the launch of spot ETFs and especially after Trump’s election victory.
The key question now: will Wednesday’s Fed decision ignite another rally, or confirm the warning signs pointing toward a correction?
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