APREX · EST. 2026
Broad market decline following Trump's statement
All three major U.S. indices — the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite — closed in the red on Tuesday after President Donald Trump publicly declared the ceasefire over, according to Yahoo Finance. The statement triggered immediate market turmoil and contributed to a marked shift toward risk aversion among investors.
Oil prices moved higher in the wake of the announcement, as traders priced in increased geopolitical risk and potential supply chain disruptions. The energy sector thus stood out as a bright spot in an otherwise weak market.
Risk aversion dominates the entire market
Sentiment indicators underscore the severity of the situation. CNN Money and comparable indices now place market sentiment firmly in "extreme fear" territory, with the Fear & Greed Index at 20 out of 100 as of July 8, 2026. This is a condition in which investors typically sell risky assets and seek refuge in government bonds, gold, and the dollar.
The equity market decline coincides with a period in which Bitcoin has shown an unusually high co-movement with the S&P 500. According to research data, the correlation coefficient between Bitcoin and the S&P 500 has recently hovered around 0.85 — meaning the two asset classes are largely moving in lockstep.
Bitcoin: Hedge or risk asset?
The question of Bitcoin's role during geopolitical stress is not straightforward. The historical record presents a nuanced picture. During the initial U.S.-Iran escalation in January 2020, Bitcoin rose 20 percent while the S&P 500 fell 7 percent. During the COVID-19 outbreak in March 2020, the cryptocurrency climbed 21 percent. Russia's invasion of Ukraine in February 2022 initially triggered a sharp drop for Bitcoin, but the asset recovered to $44,000 by March 1.
James Butterfill, Head of Research at CoinShares, has previously identified what he describes as a structural shift in 2025, in which geopolitical risk — particularly from the Middle East — has increasingly become a primary driver of Bitcoin's price swings. He points out that Bitcoin's rise during U.S.-Iran tensions challenges established financial theory, which typically associates cryptocurrencies with risk-sensitive assets that fall during times of crisis.
High correlation reduces diversification
The high correlation between Bitcoin and equity indices has significant implications for portfolio management. A coefficient of 0.85–0.88 means that a portfolio combining Nasdaq-heavy equity positions with Bitcoin may be far less diversified than it appears on paper. If a macro shock — whether from inflation data, earnings disappointments, or geopolitical events — materializes, both asset classes could fall simultaneously.
Research data also suggests that there are periods when the crypto market shows subdued activity and investors instead gravitate toward traditional safe havens such as government bonds and the U.S. dollar. Geopolitical uncertainty alone is therefore no guarantee of a crypto price rally.
What happens next?
Market participants are now closely watching whether Trump's statement leads to concrete military or diplomatic consequences. The direction of oil prices will likely remain tightly linked to how the conflict develops. For European equity markets — including the Oslo Stock Exchange — a sustained period of risk aversion in the U.S. would typically spill over through reduced risk appetite and pressure on the commodities sector, even though Norwegian oil production could in principle benefit from higher oil prices.
In the meantime, the geopolitical picture remains unclear, and sentiment indicators leave little room for optimism in the near term.
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