Stocks Hit Record Highs as Crypto Lags and Volatility Rises
U.S. equities surged Monday, with the S&P 500 reaching 6,519 points for the fourth consecutive record-breaking session. The Nasdaq also hit all-time highs, while the Dow Jones traded near last Thursday’s peak, reflecting strong risk-on sentiment.
Equities shrugged off a weak September manufacturing survey as bond yields declined ahead of an anticipated 25-basis-point Federal Reserve rate cut on Wednesday. Fed funds futures suggest rates could fall from 4.25% to 3% within the next year, supporting market optimism.
Bitcoin and Crypto Struggle
Bitcoin (BTC) traded indecisively between $114,000 and $117,000, forming a Doji candle. At the time of writing, BTC stood at $115,860, below its August peak above $124,000. Analysts attribute muted performance to long-term holders taking profits, countering the bullish influence of spot ETF inflows.
Other major tokens also showed weakness. Ether (ETH) fell from nearly $4,800 to $4,500 after setting all-time highs above $5,000 last month. XRP retreated to $3.00, following a weak continuation from last week’s breakout, while Dogecoin (DOGE) dropped to $0.267 from $0.307 amid reports of whale selling.
Analysts caution that a 25-basis-point Fed cut could resume gradual BTC gains, whereas a surprise 50-bps move might trigger sharp volatility in stocks, crypto, and gold.
Volatility Measures Signal Caution
The VIX, which tracks expected S&P 500 volatility, jumped 6% to 15.68 points. Historically inversely correlated with the S&P 500, a breakdown in this pattern can precede corrections. Menthor Q noted that Monday’s simultaneous rise in SPX and VIX may signal stretched positioning as traders hedge with calls and puts.
Bitcoin’s 30-day implied volatility also rose 3%, maintaining alignment with the VIX, though BTC’s correlation with traditional volatility indices has turned negative since spot ETFs launched in January last year.
