CHART OF THE DAY: Volatility-Liquidity Loop

Volatility-Liquidity Loop: This remains both the most obvious and, based on how recurrently it (still) plays out, most underappreciated modern market structure fragility:  

• volatility spikes → liquidity goes down → price moves get amplified → vol spikes more → and you get stuck in a negative vol-liquidity-price spiral.

And once you hit critical condition thresholds across one or multiple nodes in the loop is when you get non-linear outcomes.