Markets Look Past Geopolitics, But Cryptos Behave Irrationally

Market participants seem to be overlooking significant geopolitical events in places like Venezuela and Greenland.

The impact from Venezuela has mostly dissipated. Oil prices eased but are still close to levels seen before US captured Maduro. Equities continued to rise, and foreign exchange markets have shifted focus away from geopolitical concerns.

This illustrates the hesitance following "Liberation Day" to engage with the headlines and instead adopt a more optimistic perspective.

The dollar made a slight recovery yesterday, likely influenced by seasonal inflows and a small increase in front-end swap rates, rather than geopolitical factors.

Provided that the US refrains from intensifying threats towards Greenland or intervening once more in Venezuela, data is expected to take center stage as a crucial factor influencing market movements.

Wednesday's data showed a mixed signal for the US economy, weighing on crypto traders more than equity investors.

Private jobs report, and JOLTs data pointed to more weakness in the labour market, while the services activity survey showed the fastest expansion in over a year.

The jobs data clearly points to sluggish sentiment at the start of 2026, meaning more Federal Reserve rate cut bets. So the notion is clear, for Americans, 2026 could be more of the same on the jobs front, like it was last year.

However, crypto stocks and Bitcoin exchange-traded funds turned volatile despite bets of more Fed easing.

This week, top public US crypto firms experienced substantial gains following a market surge that propelled key tokens to multi-week peaks.

Bakkt, a platform for crypto infrastructure, led Monday's performance with a 31.5% gain and kept rising after hours, by roughly 5%, reaching $15.52.

With a remarkable gain of more than 24%, Kindly MD, a firm centered around Bitcoin treasury, finished Monday among the top five gainers.

Crypto mining company stock was on the rise as American Bitcoin surged 13.5% the same day to break $2 for the first time in over a month.

But the tide turned.

The value of Ethereum fell to $3,214, while Bitcoin experienced a decline of 1.9%, settling around $91,974, which negatively impacted traditional equity benchmarks.

The majority of miners experienced declines of 2.6% and 2.4%. Meanwhile, Strategy saw a drop of 4.1%, Coinbase fell by 1.7%, and Riot Platforms managed a slight increase of approximately 1.3%.

Two of the largest bitcoin ETFs – the iShares Bitcoin Trust (IBIT) by BlackRock and the Fidelity Bitcoin Trust – experienced a decline of approximately 2%.

To some degree, the movement of ETF flows continues to influence the market.

According to information from Farside Investors, following an influx of $697.2 million on Monday, US spot bitcoin ETFs, which directly hold Bitcoin instead of futures, experienced a net outflow of $243.2 million on Tuesday and a net outflow of $486.1 million on Wednesday.

That despite emerging rivals positioning themselves in the realm of cryptocurrency funds as well.

Morgan Stanley submitted a filing with the US SEC on Tuesday for an ETF linked to the prices of Bitcoin and Solana, marking a significant step by a major US bank.

MSCI Defers But Cryptos Suffer

What was even more surprising was crypto moves despite MSCI's decision to abandon the crypto-treasury exclusion initiative.

To undertake a more thorough review, MSCI has decided to halt its plan to exclude "digital asset treasury" companies from its indexes.

Still, Bitcoin fell almost 2%, which affected crypto stocks and ETFs.

Digital asset treasury companies, or DATCOs, are companies whose total assets are 50% digital assets or greater. The group has decided to confer more extensively on how to handle non-operating enterprises instead.

The index standards are not just theoretical, which is why it is important. Any update to a list can trigger trades from passive funds and benchmark trackers, which can have an immediate impact on other cryptocurrency proxies.

Not to mention how awkward the time is.

Stock markets react to every nuanced shift in policy, and the initial enthusiasm for cryptocurrencies has faded as the mood shifts from optimism about fresh activity to scepticism about its stability.

Companies that specialize in handling digital asset treasuries saw a meteoric surge in popularity in 2025, as more and more businesses started to employ tokens like Bitcoin and Ether as their main treasury assets.

The MSCI decision resolves a major pressing technical issue, although any exclusion will probably happen later this year.

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