Editor’s Note
The recent calm in financial markets may be illusory. As this analysis argues, stability is being maintained by precarious artificial means, exemplified by the sharp, volume-starved compression in the VIX. This suggests underlying risks are being suppressed, not resolved.
For the past few days, financial markets have given an impression of order and recovery. However, everything indicates that the system is now held together only by increasingly precarious artifices. The flash collapse of the VIX on Monday is the most striking illustration: while volumes on the S&P 500 remained anemic, implied volatility was compressed by more than three points in a few hours — not because risk disappeared, but because it was artificially crushed by algorithms and derivative flows.
This type of intervention, now recurrent, allows for the postponement of forced sales, induces a mechanical rebound in indices, and creates the illusion of stability. Yet, during that same session, several billion dollars in short positions were introduced at the open, notably on the S&P 500 around the critical threshold of 6,575 points. These shorts were methodically annihilated by volatility manipulation: the VIX plunged by -3 in less than two hours, triggering a widespread short squeeze that propelled the S&P above 6650, forcing sellers to buy back in panic. On the surface, everything seemed orderly. In reality, this artificial compression of risk simply erased, in one session, massive positions built since Friday’s shock.
In parallel, the cryptocurrency market offers another image of disorder. After the liquidation of over $20 billion on Friday, volumes literally exploded, revealing statistical anomalies impossible to ignore. Some tokens show daily volume ratios equivalent to 10, 12, or even 15 times their market capitalization — a completely aberrant phenomenon in a normal market. To grasp the delirium: imagine a listed company whose entire capital would be traded twelve times in a single day. Such a level of activity cannot be organic. It reveals a systematic manipulation of liquidity, orchestrated by major exchange platforms — primarily Binance and Tether — to maintain the facade of a “lively” and supported market.
Market data confirms this: several low-capitalization tokens, like First Digital USD (FDUSD), Plasma (XPL), or Pump.fun (PUMP), display volumes exceeding eight or ten times their market cap — even surpassing sector giants like Tether or USDC. A market that trades itself twelve times in twenty-four hours is no longer a market: it’s a closed circuit, fueled by mirror trading and automated wash trades.
It is therefore no surprise that, simultaneously, Tether issued several hundred million USDT “out of thin air” before injecting them into Kraken and Binance: monkey money intended to create the illusion of buyer flow and artificially support Bitcoin. This pseudo-liquidity is, in the crypto world, the equivalent of the emergency monetary QE of central banks. The system is still breathing, but through artificial injections.
Behind these facade manipulations lies a much deeper structural imbalance: the dominance of fiscal policy over monetary policy — in other words, fiscal dominance.
For two years, the Fed has no longer been able to conduct an independent policy. The weight of the US deficit and the necessity to continuously refinance a debt exceeding $35 trillion impose their constraints on the central bank. The US Treasury has chosen to flood the market with short-term securities — T-Bills of a few months — to avoid issuing long-term debt, where rates have become unsustainable.
This shift translates into a brutal shortening of the average maturity of the debt held: $0.68 trillion at less than one year, versus $1.6 trillion beyond ten years. The structure of the Fed’s balance sheet now reflects that of a system financing itself short-term. This is the typical symptom of a monetary policy subordinated to fiscal needs: issuance is no longer to manage rates, but to survive the next refinancing. This fiscal QE, disguised as maturity management, aims to artificially contain long-term rates — otherwise the Treasury’s interest burden would become explosive.
But this artificial construct is beginning to crack, as more and more investors — central banks, institutional funds, and now the general public — understand the trickery of debt financing through disguised monetary creation. Under the guise of “stability” or “yield curve management,” governments now live in permanent dependence on central bank liquidity. This mechanism, called “fiscal dominance,” keeps markets in a state of weightlessness while concealing the loss of credibility of the system. And it is precisely in the physical metals market — where reality cannot be printed — that this illusion begins to shatter.
Available stocks at the LBMA and COMEX have melted by a third in two years, and the situation has reversed: for the first time since 1980, futures contracts are trading in strong backwardation, with spot prices exceeding future maturities by more than $2. This means that metal delivered today is worth significantly more than that promised tomorrow — an unequivocal sign of market dislocation. Bar holders refuse to lend, leasing rates are soaring, and delivery premiums are reaching record levels.
Latest market data indicates that silver leasing rates in London have reached historic highs.
