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Geopolitical Risk Keeps Investors on Edge
ETFS Multi-Asset Weekly Geopolitical Risk Keeps Investors on Edge
Can oil’s rebound be sustained without geopolitical risk?
Goldminers outperform as investors await US earnings.
USD pares losses ahead of jobs data.
Geopolitical risk has again hit the headlines, after Saudi Arabia launched air strikes on Yemen, prompting investors to seek defensive portfolio hedges. Oil and gold have staged solid rallies, while rising volatility has left investors concerned over the sustainability of equity market gains. Investors will have one eye on the US earnings reports scheduled to begin this week, with the USD strength potentially posing a threat to corporate bottom lines. The other will be monitoring global developments including whether or not Greece can submit an agreeable set of reforms for creditors, while balancing its own citizens’ expectations.
Commodities
Can oil’s rebound be sustained without geopolitical risk? The rebel fighting in Yemen that drove a Saudi Arabian led Coalition to launch military action boosted WTI crude prices over 10% last week to their highest level in three weeks. However, if the action is able to quell the violent rebel uprising, we expect some near-term weakness as the market refocuses on abundant supply. We expect a bottoming process has begun in oil and medium term strength is likely. Elsewhere in the commodity complex, rising geopolitical risk also boosted precious metals prices, with silver being the largest beneficiary of the flight to defensive assets by investors. The rising risk environment will add to the current low/negative rate environment in enhancing the appeal of precious metals. The release of the WASDE crop conditions report is a key highlight for the agricultural sector this week. The report will give insight into the planting intentions of US farmers for grain crops and the health of the winter wheat crop, allowing investors to gauge the supply side strength compared to the record 2014 crop.
Equities
Goldminers outperform as investors await US earnings. While most major equity indexes struggled to make headway against rising volatility on the back of geopolitical concerns, goldmining companies remain an investor favourite. The DAXGlobal Gold Miners index continued to stage a rally, in line the rally of gold and has risen by nearly 12% over the past three months. Meanwhile investors continue to push Chinese equity valuations higher, seemingly more comfortable with a stabilising growth outlook, despite a weakening in the manufacturing indicators last week. The MSCI China A Index ended the week up nearly 3% at an all-time high. The focus for investors this week will be the beginning of the corporate earnings season in the US. With equity valuations retreating from recent record highs, investors will be looking for evidence of a softening in results and the impact of the stronger USD. If these conditions are realised we could see a pullback in equity performance.
Currencies
USD pares losses ahead of jobs data. Fed chair Yellen’s speech last week highlighted the gradual nature of the tightening cycle when it begins later in 2015. Nonetheless, the USD has taken back some of its recent losses despite weaker data and investors are looking ahead to jobs numbers which have been the one area of strength for the US. Certainly inflation is non-existent, and has reached zero not just in the US, but also for the first time in the UK. While revised Q4 GDP is expected to moderate, European investors will be more interested in the Eurozone CPI and unemployment readings, which are likely to reveal that the ECB still has much to do to help boost inflationary pressures via strengthening demand.
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Dogecoin’s performance and staying power across multiple market cycles suggest it is not “just another one of those memecoins”.
Over the past decade, DOGE has outperformed even Bitcoin, delivering over 133,000% in returns, nearly 1,000x BTC’s gains in the same period. Despite deep drawdowns during bear markets, Dogecoin has shown remarkable structural resilience.
Following each major rally, it has consistently formed higher lows, a pattern of long-term appreciation and compounding strength.
Historically, Dogecoin has closely mirrored Bitcoin’s movements, often peaking a few weeks after. While 2024 saw Bitcoin dominate headlines following landmark ETF approvals, DOGE still followed its trajectory, though it has yet to stage its typical delayed breakout.
As macro uncertainty continues to fade and momentum returns to the market, retail participation is likely to accelerate, setting up conditions in which Dogecoin has historically thrived.
At the same time, regulatory clarity around Dogecoin has improved. The SEC recently confirmed that most memecoins are not considered securities, comparing them to collectibles. Additionally, they clarified that proof-of-work rewards, like those earned from mining DOGE, also fall outside that scope. These developments further legitimize Dogecoin’s role in the ecosystem, potentially setting the stage for its next paw up, especially as it now holds a firm base around $0.17, nearly 3x its pre-rally level before reaching a new all-time high in the last cycle.
In addition to its long-term performance, Dogecoin stands out as an asset that behaves asymmetrically, offering investors a rare source of uncorrelated returns across both traditional and crypto portfolios. With an average correlation of just 15% to major assets, DOGE’s price action remains largely detached from broader macroeconomic trends, reinforcing its value as a true diversification tool.
Dogecoin demonstrates significant independence within the crypto market, with its correlation to Bitcoin at only 31% and to Ethereum at 37%. This divergence stems from unique capital flow dynamics, where higher-beta assets like DOGE tend to rally after blue-chip crypto assets reach major milestones.
While Bitcoin slowly evolves into a digital store of value and Ethereum powers decentralized infrastructure, Dogecoin remains largely a cultural asset, thriving on narrative momentum and crowd psychology, offering explosive upside when risk appetite surges.
For investors seeking an upside without mirroring the behavior of core holdings, Dogecoin offers a compelling case. Its ability to decouple from market trends while tapping into more speculative surges makes it a powerful, though unconventional, addition to a portfolio with wildcard potential.
Research Newsletter
Each week the 21Shares Research team will publish our data-driven insights into the crypto asset world through this newsletter. Please direct any comments, questions, and words of feedback to research@21shares.com
Disclaimer
The information provided does not constitute a prospectus or other offering material and does not contain or constitute an offer to sell or a solicitation of any offer to buy securities in any jurisdiction. Some of the information published herein may contain forward-looking statements. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties and that actual results may differ materially from those in the forward-looking statements as a result of various factors. The information contained herein may not be considered as economic, legal, tax or other advice and users are cautioned to base investment decisions or other decisions solely on the content hereof.
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