Markets extended their rebound through most of the week, building on the recovery that began after last Thursday’s Trump–Musk fallout, which briefly sent BTC toward USD 100,000. The tone was constructive into midweek: breadth improved, small caps caught up, and major indices flipped positive on the year.
Adding fuel was a mix of softer inflation data, declining volatility, and signs of a tentative US–China trade deal, which saw both sides agree to a partial rollback of proposed tariff hikes. That boosted sentiment globally, reinforcing hopes that geopolitical risk could fade – at least in one direction.
However, that optimism was short-lived.
Overnight Israeli strikes on Iranian targets rattled global markets, sending oil surging, risk assets lower, and safe havens like gold and CHF sharply higher.
In crypto, BTC has decisively pulled from yesterday’s highs, holding just above USD 105,000 but once again demonstrating its resilience as broader crypto markets and high betas come under increasing sell pressure.
The week began with calm, rotation, and signs of diplomatic progress. It ends with escalation and a stark reminder that risk is never unidirectional.
Macro: No One is Pulling the Brakes
Last Friday’s strong NFP print (+139,000 vs +126,000 expected) put the bond market on edge, triggering a hawkish shift in rate expectations. But softer-than-expected CPI midweek gave doves something to lean on; core inflation cooled (CPI Core 0.1% MoM, Exp. 0.3% ), and markets quickly priced in an 80% chance of a September cut, with October now increasingly in play. Trump, never one to miss a headline, responded by calling for a full percentage point cut to ease the cost of debt.
Meanwhile, US–China relations took a step forward this week, with Trump declaring a trade deal “done”. But behind the diplomacy, the real story was fiscal.
Trump’s proposed USD3 trillion “Big Beautiful Bill” became a flashpoint – drawing a public rebuke from Elon Musk and reigniting the deficit debate. With deficits running well above 5% across developed economies, the reality is clear: the system runs on debt, and no one is pulling the brakes.
And just as markets were digesting the policy noise over the past week, geopolitics returned with force. Reports of Israeli strikes on Iranian targets overnight sent oil surging, volatility spiking, and risk assets bleeding with markets now reassessing tail risks heading into the weekend.
Crypto: Shakeout, Rotation, and Resilience
BTC came under pressure late last week, dropping toward USD 100,000 after the Trump–Musk fallout. While the timing drew attention, the move looked more like a positioning flush than a structural break – clearing out weak hands and reaffirming USD 100,000 as firm support. Since then, BTC has held steady, even through geopolitical stress, reinforcing its role as a macro hedge.
ETH, meanwhile, is seeing a clear resurgence in institutional demand. ETH ETFs saw USD 240m in net inflows on Wednesday, overtaking BTC for the first time and extending an 18-day streak of inflows.
Momentum is building for ETH, with policy developments like the GENIUS Act and growing regulatory clarity around stablecoins adding to the broader tailwinds.
SOL also rallied after the SEC requested updated ETF filings, with approval now seen as possible by July. Whilst SOL has been largely sidelined in recent months since the unfold of Libra scandal, the setup now is increasingly compelling. That being said there is still work ahead before it can mount a serious challenge toward its all-time high above USD 290.
BTC remains the macro anchor. ETH is the institutional growth trade. And SOL may be the next beneficiary in a market starting to broaden.
Looking Ahead: Oil, Optics, and the Rotation Beneath the Surface
Markets will stay glued to the Middle East as the Israel–Iran situation evolves, with oil front and center in the near term. Expect volatility to spike around headline risk, especially heading into the weekend.
But beyond geopolitics, the structural backdrop remains intact: inflation is easing, liquidity is rising, and political will favors spending over austerity. This is an environment where real assets thrive and in particularly those outside the traditional system.
In crypto, institutional inflows are no longer just narrative, they are showing up in flows and positioning. Even with risk sentiment wobbling, underlying conviction has not cracked. BTC does not need a new narrative. It is already playing the long game.
All it needs is time. And a bit more liquidity..
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