The recent upheaval in the AI sector has led to a significant reassessment of tech stock valuations, triggering a sharp selloff in US markets. This was catalyzed by DeepSeek, a Chinese startup, launching a cost-effective AI model that quickly topped Apple's app store, raising questions about the sustainability of current AI valuations. The resulting market turbulence has driven investors towards safe-haven assets, causing a rally in Treasuries and a rise in haven currencies like the yen and Swiss franc. Amid this backdrop, the VIX, Wall Street's "fear gauge," surged to 17.93, reflecting heightened market volatility and investor anxiety following the tech selloff.
The ProShares Short VIX Short Term Futures ETF (SVXY) experienced a decline, dropping 3.09% to $50.50 as of 18:40 on Monday, January 27.