The Historical Pattern of Wartime Markets
Since the onset of the current geopolitical conflict, markets have been gripped by uncertainty. Yet history offers a striking and counterintuitive lesson: stocks tend to bottom remarkably early in the timeline of major wars. Across eight major conflicts over the past 125 years, equity markets have historically bottomed just 10% into the duration of the war — often before troops are even fully committed.
Consider World War II as a case study. The United States entered the war on December 8, 1941. The Dow Jones Industrial Average hit its bottom just five months later, in May 1942, even though the total war lasted 45 months. The first major battle — the Battle of Midway — didn't occur until June 1942, one month after the market had already begun its recovery. The U.S. didn't even enter the European theater until D-Day in June 1944, a full two years after the market bottom. Throughout that entire period, stocks climbed.
The lesson is clear: markets don't wait for resolution. They begin recovering once the worst of the uncertainty is priced in.
Three Signs the Bottom Is In
Applying this historical framework to today's environment, three converging macro signals suggest the market bottom has already occurred.
1. The Oil-Equity Correlation Broke
Since the war began, oil and equities maintained a tight inverse correlation — the strongest in a year. When oil rose, stocks fell, and vice versa. This relationship held consistently until a pivotal shift occurred at the end of March. Oil prices rose, and yet the S&P 500 climbed 5%. That break in the inverse correlation was the first signal that the market's relationship with the conflict was changing.
2. Less Bad News Became Good News
The second signal came with the ceasefire. While a ceasefire is not the end of a war, it represents the beginning of the end. In markets, what matters most is the rate of change. When the trajectory shifts from escalation to de-escalation — when less bad happens — markets interpret that as positive. As soon as signs of de-escalation emerged, oil fell 20% and the S&P rose in tandem.
3. The VIX Reset to Pre-War Levels
The third and perhaps most decisive signal occurred on April 9th. The VIX, Wall Street's fear gauge, had spiked to 35 shortly after the war began and closed above 30 at the end of March. Then it dropped, closing below 20 for the first time since the conflict started — a return to pre-war levels.
This pattern carries historical significance. Since 1990, there have been four instances where the VIX rose above 30, oil experienced a significant decline, and the VIX subsequently closed below 20. In every case, markets rallied. The median six-month return following such a reset is 9%. Applied to the current S&P 500 level, that implies a move toward 7,400 — surpassing the all-time high.
Nobody rings a bell at the bottom. But these three signals, taken together, make a compelling case that the bottom is behind us.
Crypto as the Leading Asset Class
What's particularly noteworthy is that since the war started, cryptocurrency — including both Bitcoin and Ethereum — has been the best-performing asset class, dramatically outperforming even gold. This is a significant shift in the narrative around digital assets as a store of value and risk-on investment.
The Institutional Bull Case for Ethereum
Beyond the macro recovery thesis, there is a powerful structural argument for Ethereum's long-term outperformance. As traditional finance (TradFi) increasingly moves on-chain, Ethereum's Layer 1 stands to be the primary beneficiary — at least in the initial phase.
The reasoning is rooted in institutional risk management. Since the 2008 financial crisis, risk and compliance functions have held enormous power within banks. When these institutions decide to build in the blockchain space, the safest choice — the one that gets past compliance — is Ethereum Layer 1. It has never gone down. It is battle-tested. It is the default.
This pattern is already playing out. BlackRock, for instance, rolled out its tokenized fund (BUIDL) on Ethereum Layer 1 first, only later expanding to Avalanche and select Layer 2s. This is the logical playbook for how institutional adoption will proceed: Ethereum first, other chains later.
The key valuation metric to watch is fees paid on applications and protocols built on the Ethereum network relative to market capitalization. More institutional activity on Ethereum means more fees, more usage, and ultimately a higher token price.
By the end of 2026, the ETH/BTC ratio could rise from roughly 0.03 to 0.04, implying an Ethereum price of around $4,000 alongside a Bitcoin price of $100,000. Looking further out, the long-term forecasts from major financial institutions are staggering: $500,000 for Bitcoin and $40,000 for Ethereum by 2030. For Ethereum, that represents roughly a 20x return from current levels — and a massive outperformance relative to Bitcoin.
The Case for Buying the Dip
The head of the world's largest asset manager, overseeing nearly $400 billion, has put it simply: in almost every period of time in our lifetime, buying the dips has paid off. Even an investor who entered the market on January 1, 2000 — right before the dot-com crash, the Great Financial Crisis, and the COVID pandemic — would have made over eight times their money by staying invested.
The global capital markets are still in the early stages of expansion, and blockchain technology is becoming an integral part of that growth. The convergence of a likely market bottom, institutional adoption of blockchain infrastructure, and the structural advantages of Ethereum's ecosystem creates a compelling case for those willing to look past the fog of war.