Global markets are in panic due to tariff policies, and the VIX index has surged.

Recently, the global market has fallen into panic due to adjustments in tariff policies. In 2025, a new tariff policy was announced that imposes at least a 10% tariff on goods from most countries, and higher rates on about 60 countries that have a significant trade deficit with the United States. This decision has raised concerns in the global market, mainly for the following reasons:

1. Increased corporate costs and declining profit expectations.
2. The global supply chain is disrupted, and economic uncertainty is increasing.
3. It may provoke retaliatory tariffs from other countries, increasing the risk of a trade war.

In this environment, investor behavior may undergo the following changes:

• Reduce allocation to high-risk assets such as stocks and cryptocurrencies.
• Increase investment in safe-haven assets such as gold, US dollars, and Japanese yen.
• Increased expectations of market volatility led to a rise in the VIX index.

The chain reaction of tariff policy can be simplified as: Tariff increase → Cost rise + Supply chain disruption + Retaliation risk + Investment caution + Flight to safety → Market panic spreads

It is worth noting that on April 7, the VIX index surged to 60, a level that is extremely rare. Historically, such a high value has only occurred three times, with the last instance on August 5, 2024, and the earliest during the COVID-19 pandemic in 2020.

The current VIX index is at historically extreme levels, which provides us with an important reference for analyzing market trends.

Introduction to the VIX Index

The VIX index is calculated based on the prices of S&P 500 index options to reflect the expected volatility in the market for the next 30 days, and is regarded as an important indicator of market uncertainty and panic sentiment.

In short, a higher VIX index indicates that the market expects more intense future volatility and stronger panic emotions; conversely, a lower VIX suggests a calmer market and higher confidence. Historical data shows that the VIX typically rises during significant declines in the stock market and falls when the stock market stabilizes and rises. Due to this inverse relationship with the stock market, the VIX is referred to as the "fear index" or the market's emotional thermometer.

The normal level of VIX is around 15-20, which belongs to the calm range; when VIX is above 25, it indicates that the market is starting to panic significantly; and above 35 it belongs to extreme panic. In extreme crisis events (such as financial crises or pandemics), the VIX index can even exceed 50, reflecting extreme risk aversion in the market. Therefore, by observing the changes in VIX, investors can gain insight into the strength of current market risk aversion, serving as a reference for adjusting investment strategies.

High Volatility Panic Zone: VIX ≥ 30

When the VIX index rises above 30, it usually indicates that the market is in a state of high fear or panic. This situation is often accompanied by a sharp decline in the stock market, but historical data shows that after extreme fear, the market often rebounds.

Between 2018 and 2024, there have been about a dozen events where the VIX closing price rose above 30 for the first time, including the volatility storm in February 2018, the year-end sell-off in December 2018, the pandemic panic in February-March 2020, the retail investor event in early 2021, and the interest rate adjustments and geopolitical conflicts in early 2022.

Statistical data shows that within 7 days after these panic events, the S&P 500 index averages an increase of about 1.4%, and there is approximately a 73% probability of an increase occurring 7 days after the event. This indicates that when the VIX spikes above 30 (the panic zone), the stock market tends to experience a technical rebound in most cases in the short term.

For Bitcoin, there tends to be a strong rebound after extreme panic. Statistics estimate that the average 7-day increase for Bitcoin is around 10%, with a win rate of about 75-80%. For example, in February 2022, when the VIX surged above 30 due to geopolitical crises, Bitcoin rose more than 20% in the following week, demonstrating a rebound phenomenon similar to the easing of risk aversion in the stock market.

Extreme Panic Peak: VIX ≥ 40

When the standard is raised to VIX ≥ 40 (extreme panic), qualifying events are extremely rare during the period from 2018 to 2024. In fact, there were only two instances: February 5, 2018, and the crash on February 28, 2020, triggered by the pandemic, which caused the VIX to close above 40 (for the first time in four years). Subsequently, the VIX briefly surged to an unprecedented 82 points in March.

Due to the extremely limited sample size, the statistical results are only for reference: after the event in 2020, the S&P 500 slightly rebounded by about 0.6% within 7 days (the market experienced severe fluctuations that week but had a slight technical rebound), while Bitcoin rebounded by about 7%. Both have a win rate of 100%, but this is solely due to a single event increase (it does not guarantee an increase in the future under similar circumstances). Overall, when the VIX reaches historical extreme values above 40, it often indicates that the market's extreme panic selling pressure is near its peak, and the opportunity for a short-term rebound is relatively high; from a larger cycle perspective, it is a relatively low point.

On February 5, 2018 (VIX surged more than 100% during the day to nearly 50): the S&P 500 only rose by 0.28% a week later, with no significant increase. However, Bitcoin plummeted 16% that day, reaching a local low of about $6,900, and rebounded to over $11,000 two weeks later, indicating significant rebound momentum. However, in the context at that time, the correlation between Bitcoin and traditional asset movements was not high, so using VIX to judge Bitcoin's movement was not appropriate.

In mid-March 2020 (VIX peak at 82): After hitting the bottom on March 23, the S&P 500 rebounded more than 10% within a week, while Bitcoin also surged approximately 30% from below $4,000.

Although the short-term performance after extreme panic is statistically biased towards the positive, the small sample size means high uncertainty. Moreover, the correlation between Bitcoin and the U.S. stock market was not as closely aligned as it is now. In practice, a VIX above 40 is more of a signal confirming that the market is in a state of extreme panic, and future market trends still need to be assessed in conjunction with fundamental information.

Low Volatility Range: VIX ≤ 15

When the VIX index falls below 15, it usually indicates that the market is in a relatively calm state. Investor sentiment is more optimistic, and the demand for hedging is low. However, the subsequent trend at this time is not as consistently clear as when the VIX is high:

During the period from 2018 to 2024, the VIX fell below 15 multiple times, for example, after a strong rebound in the stock market at the beginning of 2019, during the stable period at the end of 2019, during the upward phase of the stock market in mid-2021, and in mid-2023. During these periods, market volatility was at historically low levels (sometimes referred to as market calm).

S&P 500 Average Performance: After event points where VIX is extremely low, the average return of the S&P 500 over the next 7 days is approximately +0.8%, with a win rate of around 60-75% (slightly higher than random probability). Overall, in a low volatility environment, stock indices tend to maintain a gradual rise or slight fluctuations. For example, in the week following October 2019 when VIX fell below 15, the S&P 500 remained stable and slightly reached new highs; in July 2023 when VIX was around 13, the index continued to rise gradually by about 2% over the next week. This indicates that a low VIX does not necessarily lead to an immediate pullback; the market may continue to maintain an upward trend for some time. However, it should be noted that extremely low volatility often implies market complacency, and once faced with unexpected negative news, the volatility and declines may significantly amplify.

Bitcoin Average Performance: The price action of Bitcoin during periods of low VIX lacks a clear direction. Statistics show that its 7-day average increase is only about +2%, with a win rate of approximately 60%. Sometimes, the calm period of low VIX coincides with Bitcoin's own bull market phase (for example, in the spring of 2019, low VIX accompanied a significant rise in Bitcoin); however, there are also times when Bitcoin experiences a correction during low VIX periods (for instance, at the beginning of 2018, when VIX remained low, Bitcoin was in a downtrend following a bubble burst).

Therefore, the low VIX has little predictive value for the subsequent trend of Bitcoin and must be considered in conjunction with the funding sentiment and cyclical considerations of the cryptocurrency market itself.

Overall, when the VIX is below 15, the S&P 500 often continues its existing trend (usually a gradual increase), but the magnitude of the increase and the win rate are both significantly lower than the rebound after panic. Bitcoin lacks a unified response pattern in this environment, indicating that low volatility in traditional markets does not necessarily mean synchronization in the crypto market.

Conclusion: Risks and Opportunities Coexist

The current VIX is at 50, and in the face of uncertainties regarding tariff policies, market sentiment remains in an extreme panic state. However, market trends are always born out of despair.

During the COVID-19 pandemic in 2020, the VIX peaked above 80, while the S&P 500 was around 2300 points. Even after recent panic drops, the S&P 500 is still near 5000 points, representing over 100% return in five years; meanwhile, Bitcoin was at an excellent buying point at that time, only $4800, and this bull market reached a peak of $110,000, with a maximum increase of nearly 25 times.

Each major decline is often accompanied by market repricing and capital flow, and chaos may become a ladder for ascent. Whether one can take advantage of this is the key challenge during this period. Investors need to carefully assess risks while also keeping an eye on potential opportunities.