Tuesday, Sept 5, 2023

why implied volatility no longer means what it used to, what tokenization of private equity can do for an entire market, and more

“I am looking for a lot of people who have an infinite capacity to not know what can’t be done.” – Henry Ford  ||

Hi all! I hope you all had a great weekend, and those of you that got an extra day tacked on, I hope it felt deliciously long.

You’re reading the premium daily version of Crypto is Macro Now. In this newsletter, I give some depth on factors I’m keeping an eye on that highlight the growing overlap between the crypto and macro landscapes – my focus is on how crypto is affecting the global economy, and vice versa. There is often a market discussion as well. Nothing I say is investment advice!

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IN THIS NEWSLETTER

• Implied volatility doesn’t mean what it used to

• Why this big step toward tokenization could save London’s capital market

WHAT I’M WATCHING

Implied volatility doesn’t mean what it used to

Last week, the VIX index (which measures implied volatility on the S&P 500 as derived from options pricing) saw its lowest weekly close since January 2020, before “pandemic” became a household word.

(chart via TradingView)

Why it matters:

This lack of volatility is unusual, given how “uncertain” the market is. By “uncertain”, I mean the divergence in views on where the economy is going, when and by how much the Fed will pivot, and whether or not this is priced into stock prices. Ask pretty much any analyst, and they’ll tell you they have never seen a market like this. And yet the VIX, also known as the “fear gauge”, is not showing a lot of fear.