Calm Before the Fed?
Market volatility across asset classes has dropped to multi-year lows ahead of Federal Reserve Chair Jerome Powell’s speech at the Jackson Hole Symposium on August 21–23. Traders appear confident that the Fed will move toward easier policy, though some analysts warn that complacency could prove risky.
Volatility Hits Historic Lows
In crypto, Bitcoin’s (BTC) 30-day implied volatility—tracked by Volmex’s BVIV and Deribit’s DVOL index—slumped near two-year lows of just 36% last week, according to TradingView data.
Gold shows a similar pattern. The CME Gold Volatility Index (GVZ) has more than halved in the past four months, falling to 15.22%, its lowest since January.
Traditional markets mirror the same calm. The MOVE Index, which tracks implied volatility in U.S. Treasury notes, slid to a 3.5-year low of 76%, while Wall Street’s VIX “fear gauge” dropped below 14%, down sharply from April’s highs near 45. Even FX majors such as EUR/USD are seeing compressed volatility.
Why Markets Are Calm
The expectation driving this decline: the Fed is likely to resume rate cuts in September, with markets pricing in a 25-basis-point reduction. Importantly, this easing comes from restrictive levels, not from emergency lows as seen during the financial crisis or the COVID-19 shock.
According to BITX: “Most major economies are cutting from high, restrictive rates that still slow growth. Real rates, adjusted for inflation, remain positive. That’s very different from past easing cycles, and it’s fueling the broad rally in stocks, crypto, and commodities.”
While the current calm reflects optimism, some observers caution that markets may be underestimating risks. Economic uncertainties and potential downside shocks remain, and ultra-low volatility has historically preceded sharp moves when unexpected events hit.
For now, all eyes are on Powell’s Jackson Hole remarks. Traders will look for confirmation of a September rate cut and signals on how aggressive the Fed may be. Until then, markets appear content with the rare calm—but seasoned investors are watching closely for what comes after the silence.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.