Lower volatility lifts investor confidence in risk assets, Wells Fargo’s Schumacher says

Wells Fargo’s Head of Macro Strategy, Michael Schumacher, has stated that global markets are experiencing declining volatility, which is leading to increased investor confidence in riskier asset classes, such as cryptocurrencies.

He stated that the market is complacent and volatility has been low, despite the events in Venezuela. In an interview with a business news outlet, Schumacher said the equity markets are “okay” for investors to take risks.

Volatility declines across the financial markets

Schumacher explained that volatility is a “good indicator” and has been really low in the markets. He likened market volatility to the price of insurance. The analyst referenced the recent decline of specific markets, including the CBOE volatility index and the foreign exchange market, which are currently bearish.

The analyst also referenced interest rate volatility, which he noted had declined significantly over the last few months. Schumacher said that the declining volatility in various markets could be prompting investors to take on more risk in risk assets. Coin Bureau, a crypto education platform, highlighted that investors may be more comfortable buying riskier assets, such as cryptocurrencies.

Michael Schumacher said that the core view at Wells Fargo is that the Fed will cut interest rates a few more times, but hinted at the high likelihood of the cut not beginning this month. According to the Wells Fargo macro analyst, the market believes there is a 5% chance of an imminent rate cut. 

He also added that the Consumer Price Index (CPI) is expected to be “messy” since the job market has performed below expectations. According to data from the Bureau of Labour Statistics, the U.S. created 50,000 jobs, contrary to the 60,000 jobs that analysts had forecasted. The S&P 500 and the Dow Jones Industrial Average closed at record highs after the release of the Non-Farm Payroll data.

However, the unemployment rate slightly fell to 4.4%. Schumacher highlighted that the Fed will have to wait for a month or two to gather enough data to decide on interest rates. “I think the Fed would like to cut, but not just yet,” Schumacher told the journalists. 

Renewed risk appetite returns to the market

The cryptocurrency market, a renowned risk asset class, supports Schumacher’s claims that risk appetite among investors may be returning. A recent Cryptopolitan report dated January 9 confirmed that the first week of 2026 brought renewed momentum to crypto assets. The report highlighted that the digital asset market gained momentum in both price action and capital inflows. However, analysts have raised concerns about whether the market can sustain the trend.

Bitcoin rose by more than 8% to test the $94k level since January 1. However, the digital asset has since shed these figures but still sits at 4% gain from the new year’s opening price at the time of this publication. The crypto asset is currently trading at $90,454. According to a Cryptopolitan report, altcoins excluding stablecoins are up 8% since the start of the year. The report also noted that large-cap crypto assets, such as Sui, XRP, and Solana, have outperformed Bitcoin over the same period.

Spot, derivatives, and futures volume have also increased for the first time since the second week of October. The aggregate futures open positions in BTC also signal a possible recovery after logging massive deleveraging in the last quarter of 2025. The report highlighted that these figures signal that traders and investors are re-entering the market.

However, spot Bitcoin ETFs are yet to indicate any signs of recovery. The funds have witnessed outflows of $681.01 million since last Monday, according to data from ETF tracking website SoSoValue. The data shows that institutions are still treading carefully when it comes to crypto assets. Grayscale, a crypto asset management firm, published its December 2025 monthly report, which explained that most outflows experienced by crypto ETFs were mainly tax-driven.

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