Wells Fargo's Head of Macro Strategy, Michael Schumacher, has stated that declining volatility across global financial markets is fostering increased investor confidence in riskier assets, a trend that includes cryptocurrencies. In interviews and analysis, Schumacher noted that volatility measures in equities, foreign exchange, and interest rates have been "really low," creating a market environment where investors feel safer taking on risk.
Schumacher likened market volatility to the price of insurance, suggesting its current low level is a "good indicator" of investor comfort. He specifically referenced bearish trends in the CBOE Volatility Index (VIX) and significant declines in interest rate volatility over recent months. This environment, according to Wells Fargo's analysis, is prompting a shift toward risk assets.
The core view at Wells Fargo is that the Federal Reserve will cut interest rates a few more times, but likely not imminently. Schumacher highlighted that the market currently sees only about a 5% chance of a rate cut this month. He pointed to a "messy" Consumer Price Index (CPI) outlook and weaker-than-expected job market data—with the U.S. creating 50,000 jobs versus a forecast of 60,000—as factors causing the Fed to wait for more data before acting.
This renewed risk appetite appears to be manifesting in the cryptocurrency market. A separate market report confirmed that the first week of 2026 brought renewed momentum, with capital inflows and increased trading volume across spot, derivatives, and futures markets for the first time since mid-October. Bitcoin saw an 8% surge to test $94,000 early in the year, and altcoins (excluding stablecoins) are up 8% year-to-date, with assets like SUI, XRP, and SOL outperforming Bitcoin.
However, the report also noted caution, with spot Bitcoin ETFs continuing to see outflows, totaling $681.01 million in the reported week. Grayscale attributed these outflows primarily to tax-related selling at the end of 2025, suggesting institutional investors remain measured in their approach despite the improving risk sentiment.
