The closure of the SVB bank led to the growth of the so-called “index of fear” on Wall Street

The intervention of the US authorities in the California bank Silicon Valley Bank (SVB) after its collapse on Wall Street (a loss of more than 60% on Thursday) caused the so-called fear index to skyrocket.

The VIX index, which is designed to quantify stock market volatility, rose to 27% this Friday.

The decline of SVB, which, despite being only present in the states of California and Massachusetts, has raised concerns among investors who see it as a harbinger of a new era, as it is the bank’s biggest failure since the 2008 financial crisis and one of the biggest in US history.

However, others see the end of the SVB as something idiosyncratic as it has been betting on investments in long-term Treasury bonds and venture capital firms during the novel coronavirus pandemic.

There is no doubt that his fate has affected other banks such as Signature Bank, First Republic Bank, Western Alliance or PacWest, as well as large banking conglomerates both in the US and abroad.

The VIX, which hasn’t been this high since October, is also known as the “fear index” because it measures investors’ expectations of volatility and uncertainty and serves as a tool for understanding market sentiment.

When the VIX is low, it suggests that investors are relatively optimistic and confident about future market conditions.

The Silicon Valley Bank, headquartered in Santa Clara, California, specialized in the technology sector and did business primarily with emerging companies (“start-ups”).

Difficulties facing the sector, including rising interest rates and volatile technology, have led clients to withdraw large sums from their accounts in recent months.

In order to have sufficient liquidity, the Silicon Valley bank announced on Wednesday evening that it is looking to raise capital quickly. In the ensuing turmoil, the bank lost 60% on the New York Stock Exchange on Thursday, and shares were suspended before the session began that Friday.