XRP continues to trail global stock market advances as a wave of volatility—highlighted by a rise in the VIX index—keeps traders on edge across the crypto market.

Despite a strong rally in equities, with the S&P 500 hitting its fourth straight record high at 6,519 points, major cryptocurrencies like XRP, bitcoin, ether, and dogecoin failed to maintain upward momentum. Wall Street’s optimism was fueled by dropping bond yields amid growing expectations of a 25-basis-point rate cut by the Federal Reserve on Wednesday. The futures market now prices in a potential fall in interest rates from 4.25% to 3% within a year.

Bitcoin trails the S&P 500 in price performance, forming uncertain Doji candles amid market indecision.

How XRP and Other Altcoins Are Reacting

Bitcoin (BTC) remains directionless, fluctuating between $114,000 and $117,000, continuing its modest retreat from its August peak above $124,000. The trading indecisiveness, represented by Doji candlesticks, suggests that long-term holders are still locking in profits, offsetting inflows from newly launched spot ETFs.

XRP saw its price slide to $3.00, struggling to gain traction after last week’s breakout from a descending triangle formation. The move reflects a broader cooling-off in altcoins, including Ethereum’s ether and dogecoin.

Ether (ETH) fell from near $4,800 to $4,500 in just three days, despite being touted as the “internet bond” thanks to its rewarding staking mechanism. With rate cuts on the horizon, ETH should, in theory, benefit. Yet, current price behavior shows otherwise.

Meanwhile, dogecoin (DOGE) fell sharply to 26.7 cents from 30.7 cents due to fears of significant whale sell-offs and memecoin instability following a high-profile hack.

Watching the VIX and Market Signals

Mondays’ rally in traditional equities did not come without caution flags. The VIX index, Wall Street’s widely followed fear gauge, jumped over 6% to 15.68, signaling a rise in expected volatility over the next month.

This upward move, even as the S&P 500 rose, raised eyebrows. Historically, the VIX and stock prices follow opposite paths; a correlation estimate shows they diverge almost 90% of the time over a 90-day span. But current data suggests this inverse relationship may be weakening.

Notably, market research platform Menthor Q pointed out that simultaneous increases in SPX and VIX often reflect overly optimistic positioning. Traders may be buying calls while also hedging with puts, highlighting a conflicted sentiment that could make markets susceptible to sharp pullbacks.

Adding to the worry, a surprise 50-basis-point hike—as opposed to the widely expected 25—could lead to dramatic reactions across stocks, cryptocurrency, and even gold as investors scramble to adjust their positions.

Bitcoin’s Implied Volatility Mirrors Stock Market Jitters

Alongside the VIX, the bitcoin implied volatility index from Volmex also nudged higher by 3% on Monday. This index tracks expectations for BTC price swings over the next 30 days and often aligns with broader market tension.

While historically BTC volatility was positively correlated with indexes like the VIX, the pattern changed since the approval of spot bitcoin ETFs in early 2024 and was further altered by Donald Trump’s win in the 2024 U.S. elections. Analysts suggest that ever since, cryptocurrency market structures have begun to behave differently, particularly in response to institutional demand and ETF-driven flows.

Related: XRP Price: $12M Max Pain for Bears

All eyes are now on the Fed’s upcoming decision. XRP and its crypto peers may remain subdued or rebound sharply based on the central bank’s next move.