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War Drums Fade, Risk Appetite Roars

Despite Israel resuming limited strikes just hours after a tentative ceasefire, financial markets barely blinked. Traders appeared to have priced in a resolution or simply stopped waiting for one. Instead of flight-to-safety, the move was risk-on in full force. The Nasdaq 100 clocked fresh record highs, while the S&P 500 ended less than 1% shy of its all-time closing peak from February 2020. Oil prices have now fully retraced back to pre-conflict levels, further fuelling the shift in sentiment.

Among S&P 500 constituents, Coinbase Global Inc. (COIN) staged the standout performance, surging 12% on Tuesday to close at $344.94. This marked its highest level in over six months. Two major regulatory breakthroughs lit the fuse:

The GENIUS Act, a landmark U.S. bill that introduces a long-awaited stablecoin framework. This brings long-overdue compliance clarity and paves the way for institutional adoption.

MiCA Milestone: Coinbase secured formal approval from Luxembourg’s financial regulator, making it the first major U.S. crypto exchange authorized under the EU’s Markets in Crypto-Assets (MiCA) regime. The licence gives Coinbase a key regulatory beachhead across the European Union.

Elsewhere, institutional interest in Bitcoin continues to accelerate. Anthony Pompliano’s ProCap fund drew attention with a $386 million BTC purchase. This represents an explicit strategy to hold Bitcoin as a treasury reserve asset. Since the start of June, the number of corporates holding BTC on their balance sheets has nearly doubled. Over 240 firms now own a combined 3.45 million BTC. If this accumulation trend persists, Bitcoin may not just rival gold as a macro hedge but potentially in total market capitalisation.

Yet geopolitics remains an ever-present undercurrent.

Concerns around a potential NATO-Russia flashpoint are building, as European defence officials warn of the risk of armed conflict within five years. Russia is significantly ramping up military production, far exceeding Ukraine war requirements, while modernising nuclear infrastructure in Kaliningrad and fortifying western bases. In response, NATO allies are weighing an increase in defence spending to 3.5% of GDP. All eyes will be on The Hague, where Donald Trump is set to attend the NATO summit and is likely to reaffirm support for Article 5.

In this environment, the traditional risk premium is shifting from a hedge to a baseline assumption. With macro, military and monetary crosscurrents colliding, the market’s ability to discount geopolitical volatility is being tested like never before.

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