Equities Outpace Crypto as VIX Fuels Market Unease

Stocks Hit Record Highs as Crypto Trails and Volatility Rises

U.S. equities surged on Monday, leaving major cryptocurrencies behind. The S&P 500 reached 6,519 points, marking its fourth consecutive record high, while the Nasdaq also hit all-time highs. The Dow Jones traded near last Thursday’s peak, reflecting strong risk-on sentiment.

Equities shrugged off a bearish September manufacturing survey as bond yields fell ahead of an expected 25-basis-point Federal Reserve rate cut on Wednesday. Fed funds futures indicate traders expect rates to drop from 4.25% to 3% over the next 12 months, supporting investor optimism.

Bitcoin and Major Tokens Struggle

Bitcoin (BTC) remained range-bound between $114,000 and $117,000, forming a Doji candle that signals indecision. At the time of writing, BTC traded at $115,860, still below August’s record highs above $124,000. Analysts attribute the muted performance to long-term holders taking profits, which offset bullish pressure from spot ETF inflows.

Other leading cryptocurrencies also lost upward momentum. Ether (ETH) dropped from nearly $4,800 to $4,500 over three days after reaching all-time highs above $5,000 last month. XRP retreated to $3.00, showing weak follow-through after last week’s breakout, while Dogecoin (DOGE) fell sharply to $0.267 from $0.307 amid reports of whale selling.

Analysts suggest a 25-basis-point rate cut could support a gradual BTC recovery, while a surprise 50-bps move could trigger heightened volatility across equities, crypto, and gold.

VIX and Bitcoin Volatility Signal Caution

Monday’s equity gains coincided with a 6% rise in the VIX, the S&P 500’s 30-day implied volatility index, which reached 15.68 points. Though still near multi-month lows, the increase draws attention. Historically, the S&P 500 and VIX have moved inversely, with a 90-day correlation near -90. Menthor Q notes that a breakdown in this negative correlation can precede market corrections.

“SPX rose with the VIX today, which often signals stretched upside positioning as traders buy calls or hedge with puts, leaving markets vulnerable,” Menthor Q said.

Bitcoin’s 30-day implied volatility, tracked by Volmex, also rose 3% Monday, maintaining a positive correlation with VIX. However, BTC’s historical correlation with implied volatility indices has shifted negative since the launch of spot ETFs in January last year, diverging from traditional patterns.