Crypto Market Review: The Train Won't Stop

Macro Economy

US stock markets continued rising on a broad front – even small-cap companies joined the rally. All major indices are now positive year-to-date. The AI sector's lively development and Meta's 20-year energy deal particularly boosted risk appetite.

Macro outlook continues to support a "Goldilocks world" where growth is slowing but not collapsing. The jobs report still showed strength: employment grew by 139,000, and the unemployment rate stayed at 4.2%. However, service and manufacturing indices (ISM PMIs) fell below 50 points, indicating contraction in both sectors.

The VIX volatility index has fallen below 17 – far from April's highs (52) – and has supported stock markets. Risk-parity strategy funds often react to volatility declines by increasing their weight in risky asset classes like stocks.

In bond markets, the 10-year US Treasury yield rose above 4.5% again, but the MOVE index measuring interest rate volatility fell to February lows. This improves financial conditions – lower volatility reduces collateral requirements and increases leveraged investing.

Bitcoin and the Trump/Musk Drama

Perhaps the week's most discussed event was the public feud between President Donald Trump and Elon Musk. While this caused temporary uncertainty and Bitcoin's price dropped below $101,000, markets recovered quickly and BTC returned above $105,000. Over $800 million in leveraged positions were liquidated in this connection. The event was a typical reminder of how high leverage can amplify market moves. More important than the controversy itself is the underlying economic policy discussion: Trump's "Big Beautiful Bill" would increase the US deficit by up to $3 trillion over the next decade, raising concerns about fiscal responsibility – and making Bitcoin's decentralized features increasingly attractive.

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