Greece gave in to market pressure and officially requested financial aid from the European Union and the International Monetary Fund Friday, but analysts and traders say the rollercoaster ride for investors is not over.
On Thursday, the yield on 2-year Greek bonds jumped to 10 percent as investors continued to fret about the country's chances to pay back its debt, notably 8 billion euros ($10 billion) in 10-year bonds that become due on May 19.
"In accordance with the Statement of the Heads of State and Government of 25 March 2010 to provide financial support to Greece, when needed, and the follow up Statement of the Eurogroup, Greece is hereby requesting the activation of the support mechanism," Greek Finance Minister George Papaconstantinou wrote in a letter to the EU.
But this does not mean it is safe for investors to get back into Greek assets, Mohamed El-Erian, CEO of Pimco, said.
"We exited early from Greece, we saw this as a slow-moving train wreck," El-Erian told "Squawk Box."
"It's not about Greece, it's about the shock to public finances that has occurred as a result of the crisis."
Last month the EU and the IMF agreed to give Greece a combined 45 billion euros in help should the country need it. But up until Thursday, Greek officials insisted the country could borrow the cash it needs from the markets.
"Probably (Thursday's) eruption in the Greek bond market forced their hand," Martin van Vliet, euro zone analyst at ING Bank, told CNBC.com.
One possible scenario is that the IMF will go in and help first, because it takes time for the EU's aid package to be activated, with Germany, the main opponent, still facing a battle to get the package approved by parliament, Van Vliet said.
After an initial jump on news that a Greek request for aid was coming, the euro slipped back to around $1.33 in middy trading. But European stocks rallied.
Yields for 2-year Greek bonds fell to around 9.2 percent and the spread between Greek government bonds over benchmark German Bunds fell to 532 basis points from more than 600 basis points.
Greece "is certainly not out of the woods but it's a small step towards certainty," van Vliet said. "Now investors are shifting their focus to the next step."
But the next step in the process is still unclear, as the European Commission has been a bit "vague" in its response to the request, which means uncertainty is still the word of the day for markets, Laura Smith, fixed income trader at Mako Financial Markets, told CNBC.com.
"The market doesn't feel like exactly we're in the clear just yet," Smith said.
The euro's muted reaction also reflects the market's long-term opinion about the euro zone, which is still bleak, according to analysts.
"Europe just doesn't seem as cohesive as it should be," said Smith, adding that fears may now spread to other vulnerable members, such as Portugal or Spain.
Dennis Gartman, the author of the Gartman Letter, told CNBC that the single currency zone's problems were only beginning.
"I've been amazed that the union has withstood the pressures it has thus far, I'm afraid that it won't be able to stand much longer," Gartman said.
"Trying to get this passed by all of the members of the monetary union, when you have Portugal, Spain, Italy in the same circumstance, it's going to be very hard for anybody to get it passed," he added.
El-Erian said the only question for him was how long it is going to pass until markets worry about contagion.
"For Europe, Greece proves to be what the subprime was for the US," he said.
The first to be impacted will be other peripheral countries in the euro zone, then banks, then the corporate sector, and investors will retreat to safe havens like the US, he predicted.
"You're seeing this happening for the currency and to the extent that people not just exit the peripheral countries but exit the euro zone as a whole, Treasurys will gain," he said.
European investors have a lot of exposure to Greece but now that it is seen more like an interest rate risk than a credit risk, there will be capital flows out of the EU, El-Erian added.
Lesser of Two Evils
The deterioration in the Greek debt situation day after day in the markets — while officials were hesitant to decide on a rescue deal — sent a bad signal, Smith said.
"(The Greek bailout) happened with all the EU coming kicking and screaming," Smith, who maintains her short euro bias, she said.
Portugal and Spain are likely to be the next ones in the spotlight, according to Smith.
But whether they will have the same fate remains to be seen because, although they have the same fundamental problems of high debt and high public deficits, the rest of the PIIGS countries (Portugal, Italy, Ireland, Greece, Spain) do not share the main thing that led to Greece's problems: lack of credibility.
In Greece's case, investors could force it on the rocks because the country lied about its budget deficit, but "in other countries it won't be that easy," van Vliet said.
The euro zone had to choose between two evils, moral hazard and financial instability, when deciding to bail out Greece, he said.
But the step actually reduces the chances of a break-up of the single currency area, because it showed it can act to help its members, van Vliet added.
"If the euro zone unites and is willing to help each other, the euro zone aggregate picture looks better than, say, the US and the UK," he said.