Markets Are Acting Like Nothing’s Wrong

The last week of April 2026 saw significant global events, including oil prices reaching their highest levels since the start of the war, signs of an indefinite blockade in the Strait of Hormuz, and markets, particularly the S&P, hitting all-time highs. This market surge, despite Middle East turmoil, is largely attributed to the AI boom, with three of the biggest IPOs in history expected in the next six months. Meanwhile, Jerome Powell concluded his last FOMC meeting, marked by the most divided vote since 1992. In crypto news, DeFi experienced a "bailout moment" with $33 million raised in 11 days to cover a hole from the Kelp DAO LayerZero hack. The Bitcoin conference in Vegas highlighted the US government's significant Bitcoin holdings, and a US soldier was arrested for profiting from a prediction market bet using classified intelligence. A clip from Congress featured Secretary of War Pete Hegseth discussing Bitcoin's national security implications, acknowledging that China is believed to be stockpiling it and that the US is both supporting and "thwarting" its use in classified operations. This raises questions about potential US interventions against rogue regimes using Bitcoin. The war in Iran continues, with Donald Trump preparing for a long blockade of the Strait of Hormuz until Iran agrees to a nuclear deal. This has pushed Brent crude oil prices above $120 a barrel, a wartime high. The energy crisis is impacting Asia severely, and US gas prices have risen to $4.23 a gallon. Rory Johnson, an oil quant, believes oil prices could go north of $150, citing the 10-15% global oil supply locked in the Strait of Hormuz. He suggests Trump's financial pressure might eventually lead to a resolution. Iran proposed opening the Strait in exchange for delaying nuclear disarmament talks, a condition Trump rejected, intensifying the economic squeeze on Iran. Both the US and Iran face significant pain points. The US benefits from domestic oil supply (West Texas Intermediate crude), buffering it from the worst of the energy crisis, and the S&P is at all-time highs. However, high domestic gas prices, the fact that many citizens don't own assets, and rising 10-year yields due to inflation are sources of pain. Food and fertilizer prices are increasing, and commodity prices across the board are up double-digit percentages. The 30-year yield is nearing an 18-year high. For Iran, the nuclear program is a matter of sovereignty and internal legitimacy for the regime. However, their currency is hyperinflating, the economy is devastated, and the ability to pay IRGC (Islamic Revolutionary Guard Corps) paychecks is threatened. The US's "economic fury" is further reducing Iran's means, with hundreds of millions of dollars in Iranian assets being frozen. Last week, Tether froze $344 million USDT belonging to Iran on the Tron network, prompting speculation that Iran might shift towards Bitcoin or other crypto-native assets, which could test the US's ability to interfere with such holdings. Despite the geopolitical turmoil, the S&P 500 is up 13.5% in April, its best month since November 2020. This is largely attributed to the AI boom, with investors viewing other issues as "noise." Stellar earnings reports from companies like Google, which saw a 10% surge after exceeding expectations, highlight the AI sector's strength. Nvidia and Amazon are also near all-time highs. In contrast, Bitcoin and Ether have shown unremarkable price action, with Bitcoin at $76,000 and Ether at $2,250. The AI boom is exemplified by Anthropic, which surpassed OpenAI in revenue and saw its valuation jump from $380 billion to $1 trillion in three months. This rapid growth, along with SpaceX and OpenAI, is setting the stage for three of the biggest IPOs in market history. Historically, mega IPOs at peak narrative often mark the top for that theme, and these massive public offerings could drain significant capital from the system as insiders and VCs unlock and sell shares. The Federal Reserve, meanwhile, has injected $172 billion into its balance sheet over the last four months through its RPM program. The liquidity picture remains uncertain, with some expecting continued increases while others, like Michael Howell, predict a downturn. Jerome Powell's final FOMC meeting saw no change in the Fed funds rate (held at 3.5-3.75%). However, the meeting was marked by four dissenting votes, the most since 1992. While Steven Mirren dissented in favor of rate cuts, three others dissented against signaling a future easing bias, pushing back against the incoming Fed chair, Kevin Walsh, who has indicated openness to cutting rates due to concerns about AI-driven deflation. The Fed's policy statement also changed the term "somewhat elevated" inflation to simply "elevated," reflecting growing concerns, especially given the rising CPI numbers, now at 3.2%, likely influenced by increasing oil prices. Powell expressed faith in Walsh to resist political pressure from Trump. Powell is remaining as a governor until a lawsuit by Trump regarding the Fed building is resolved, a strategic move to deny Trump a majority. Historically, Powell's 8-year term saw him navigate the COVID-19 response and achieve a "soft landing" despite high inflation, which was not as transitory as initially stated. At the Bitcoin conference in Vegas, Eric Trump stated that the US government holds 300,000 Bitcoin and will not sell it, calling its suppression "unbelievable." Paul Tudor Jones, in a separate interview, reiterated his belief that Bitcoin is "unequivocally the best inflation hedge" due to its finite supply, prompting questions about his re-engagement with the asset given current inflation trends. The Mega ETH token, along with Monad, represents a revitalization of on-chain crypto-native applications. Mega ETH launched its token after hitting a KPI of 10 live ecosystem apps with real users. The token, with ticker "MEGA," launched at 15 cents, giving it a $1.5 billion valuation and a $170 million market cap. Notably, all Mega token holders have a purchase price, as there was no airdrop. While 40% of recipients sold their tokens, the fact that the valuation held at $1.5 billion is considered healthy for a bear market launch. In DeFi, the community rallied to address the Kelp DAO hack, which left a 45,000 ETH hole (approximately $100 million). "DeFi United," a collective effort involving donations and loans from various entities, raised $311 million, far exceeding the needed amount. Notable contributions included 5,000 ETH from Aave founder Stani Kulechov, 30,000 ETH from ConsenSys and Joe Lubin, and a 30,000 ETH loan from Mantle, which secured a significant governance seat and business opportunities in return. This collective action is seen as a strong demonstration of DeFi's ability to recover and coordinate without public funding, restoring faith in the ecosystem. However, April was the worst month ever for DeFi exploits, with $630 million stolen across numerous incidents, averaging an exploit every 27 hours, highlighting the urgent need for enhanced security measures and insurance funds. A US soldier, Gannon Ken Van Dyke, was charged with using classified information to profit from prediction market bets on PolyMarket. He turned $34,000 into $410,000 by betting on a US military operation to capture Nicholas Maduro in Venezuela, an operation he was part of. PolyMarket cooperated with the DOJ, emphasizing the transparency of on-chain activity in prosecuting such crimes. Separately, the CFTC (Commodity Futures Trading Commission) is in a jurisdictional dispute with Wisconsin, after the state filed lawsuits against platforms offering prediction markets. The CFTC asserted its sole authority over these markets, pushing back against state intervention. At the Bitcoin conference, the acting US Attorney General, Todd Blanch, stated that "code is not a crime," reassuring non-custodial developers. However, this message is seen as inconsistent with the ongoing prosecution of Roman Storm by the Southern District of New York, who is being retried for his involvement with Tornado Cash. Critics argue that unless the DOJ drops the case against Storm, their statement on "code is not a crime" remains mere "lip service." Finally, stablecoin growth continues, with Visa reporting a $7 billion run rate, up 50% quarter-over-quarter. Meta has also started allowing stablecoin payouts for Instagram creators through Stripe, using USDC on Solana or Polygon. This initiative, facilitated by Stripe's "Link wallet," aims to simplify global payments for creators, especially those in underserved banking regions, and highlights Stripe's increasing focus on stablecoin integration.