Shots Fired, Hormuz Locked, and the $292M DeFi Meltdown

The week ended with a gunman firing a shotgun outside the White House Correspondents’ Dinner, Secret Service evacuating the President, and zero fatalities. That wasn’t even the biggest story. Iran peace talks collapsed mid-week when Trump cancelled the Witkoff-Kushner delegation to Pakistan, and the Strait of Hormuz stayed locked under active naval blockade. Oil pushed past $96 before settling at $94.40. In crypto, the $292M KelpDAO exploit cascaded into $13B of DeFi TVL losses and forced a reckoning across lending protocols. Equities, somehow, finished higher.

Markets scoreboard

Asset	Mon Open	Fri Close	Weekly Change
S&P 500	7,126	7,165	▲ 0.5%
NASDAQ-100	26,672	27,304	▲ 2.4%
BTC	$74,735	$78,042	▲ 4.4%
ETH	$2,294	$2,332	▲ 1.7%
SOL	$84.72	$86.57	▲ 2.2%
Gold (XAU)	$4,797	$4,718	▼ 1.6%
Oil (WTI)	$87.36	$94.40	▲ 8.1%
US 10Y	4.26%	4.31%	▲ 5bp
US 2Y	3.71%	3.78%	▲ 7bp

The S&P and NASDAQ pushed higher for the week despite geopolitical chaos, carried by strong Q1 earnings. About 85% of S&P 500 companies beat estimates, with IT sector earnings growing 37.4% YoY and energy up 34% on the war premium. Goldman Sachs reiterated a 7,600 year-end S&P target and JPMorgan matched it, citing AI-driven earnings growth that now accounts for 67% of S&P 500 profit expansion.

Oil climbed 8% on the week as the Strait of Hormuz remained under Iranian blockade. WTI peaked at $96.78 on Thursday before settling at $94.40, with Brent touching $106. The ceasefire that was extended last week held on paper but the cancellation of peace talks Friday suggests it won’t survive much longer.

Gold actually pulled back 1.6% from Monday’s near-$4,800 level, an unusual retreat during active military escalation. The move likely reflects profit-taking after a multi-week run to all-time highs rather than any change in the structural bid from central banks and institutional hedgers.

Yields rose across the curve, led by the 2-year at +7bp. This is a hawkish signal: the bond market is repricing the Fed’s rate path as oil-driven inflation pressures build. The 2Y-10Y spread narrowed slightly, sitting around 53 basis points.

The WHCD shooting and its aftermath

At approximately 8:40pm ET Saturday, Cole Tomas Allen fired a shotgun at the entrance of the Washington Hilton during the White House Correspondents’ Dinner. He was armed with a shotgun, a handgun, and multiple knives. Secret Service evacuated Trump, Melania, JD Vance, and several Cabinet members including RFK Jr., Rubio, Zeldin, and Patel. One officer was struck in a ballistic vest and is expected to recover. There were zero deaths.

This was the first Correspondents’ Dinner Trump attended as president. The motive remains under investigation. Markets were closed, but expect Monday’s open to price in heightened political risk and a fresh security spending narrative.

Iran: talks collapse, blockade tightens

The Iran situation deteriorated on multiple fronts this week. Here’s the timeline:

Monday: Trump extended the ceasefire “indefinitely,” citing a “fractured” Iranian government. Oil briefly dipped on the news. Iran’s chief negotiator said the Strait of Hormuz cannot reopen due to ceasefire “violations.”

Wednesday: Pakistan began pushing for peace talks in Islamabad, with Witkoff and Kushner confirmed to travel. Iran executed a spy working for Israeli intelligence, keeping tension high.

Thursday: Oil hit $96.78, its highest level in weeks. Iran’s chief negotiator restated that the Strait would remain closed. China reported factories getting squeezed by rising input costs from the blockade.

Friday-Saturday: Trump cancelled the Witkoff-Kushner delegation to Pakistan. US CENTCOM intercepted a merchant vessel enforcing the blockade. Supply chain disruptions spread beyond energy: Italian biopharma Kedrion warned of disrupted plasma medicine deliveries to the region.

The Strait of Hormuz handles roughly 20% of global oil supply. As covered in the W16 report, the open-close-reopen pattern has made oil nearly untradeable on short timeframes. Brent at $106 is pricing in continued disruption but not a full war escalation, which would put crude well above $120.

The second-order effects keep accumulating: European households are rushing into rooftop solar to offset energy costs. Chinese factory orders are falling. The proposed 25% tariff on any country importing Iranian crude (aimed at China, which buys 80%+ of it) would add another deflationary shock to global trade.

KelpDAO and the $13B DeFi meltdown

The KelpDAO $292M exploit was the largest DeFi hack of 2026 and sent shockwaves through lending and yield protocols all week. The attack, attributed to North Korea’s Lazarus Group by security researchers, compromised RPC nodes and DDoS’d others to drain LayerZero-connected vaults.

The damage didn’t stop at Kelp. Within 48 hours, $13B in total value locked evaporated across DeFi protocols. Aave saw a $6B deposit withdrawal and AAVE token fell 16% as attackers had used drained rsETH as collateral, creating bad debt exposure. “DeFi is dead” briefly trended among developers and traders.

But the response was swift. Aave rallied DeFi partners, with Lido and EtherFi first to provide recovery support. Arbitrum’s DAO froze $71M in stolen ETH through emergency governance, though that move sparked a heated debate about whether emergency asset freezes undermine decentralization principles.

And DeFi wasn’t done taking hits. Volo Protocol lost $3.5M across WBTC, XAUm, and USDC vaults just days after Kelp. RaveDAO’s RAVE token collapsed 90% in a single day, from $27 to $1.15, erasing $5B in market cap. Binance and Bitget launched exchange probes. Ledger’s CTO called it “the worst year for hacks.”

The French physical crypto robbery trend continued too: 41 kidnappings targeting crypto holders in 2026 alone, roughly one every 2.5 days. Security, both digital and physical, became the dominant crypto narrative of the week.

AI and tech: capex arms race accelerates

The big tech AI spending race reached new levels this week. Google CEO Sundar Pichai announced $175-185B in 2026 capital expenditure at Cloud Next, up from $31B in 2022. “We are moving into the agentic era,” he said. Tesla raised its spending target to $25B+ for AI, robotics, and chips, with Musk calling the investments “well justified.” SpaceX is reportedly entering GPU manufacturing to solve chip supply constraints for its own AI workloads.

These numbers add to the Q1 picture: $300B in global venture capital, with AI taking 81% of it. Four companies absorbed 80% of that capital. The concentration keeps tightening.

On the model side, Tencent released Hy3, a 295B-parameter open-source model using mixture-of-experts architecture with only 21B active parameters, making it the most efficient major Chinese LLM. OpenAI launched ChatGPT for Clinicians, a free tool that reportedly outperforms humans in clinical documentation and research tasks. Snowflake announced a pivot from data warehousing to autonomous AI agents that “act on data, not just analyze it.”

Apple’s CEO transition to John Ternus was the biggest leadership story. The longtime hardware chief’s appointment signals Apple will integrate AI into devices (AR glasses, health sensors) rather than building standalone AI products. It’s a different bet from the pure-model approach taken by OpenAI and Anthropic.

The IPO pipeline is building: SpaceX’s expected $75B IPO plus OpenAI and Anthropic targeting $240B+ combined raises in the June-December window would be the largest VC-backed IPO wave in history. That’s also $240B in potential liquidity absorption for every other risk asset in the second half of the year.

Crypto beyond DeFi

Despite the hack-driven fear, Bitcoin had a strong week, gaining 4.4%. The catalyst: Strategy (formerly MicroStrategy) purchased $2.5B in BTC, its largest buy in 17 months. Coinbase premium remained positive for 14 consecutive days, the longest bullish streak since BTC hit its all-time high of $126K in October.

Institutional infrastructure continued its buildout:

12 European banks (BNP Paribas, BBVA, UniCredit, ING, and others) formed Qivalis, a euro stablecoin consortium built on Fireblocks. It’s the largest institutional stablecoin effort in Europe.
Morgan Stanley is building a reserve management fund for stablecoin issuers.
BlackRock’s IBIT ETF options open interest surpassed Deribit, the offshore derivatives leader. Regulated crypto derivatives have officially overtaken their unregulated counterparts.
Tether froze $344M in USDT linked to US “Economic Fury” Iran sanctions, demonstrating crypto’s growing role as a sanctions enforcement tool.

The regulatory front stayed active. New York sued Coinbase and Gemini over prediction market offerings, calling them gambling. Wisconsin filed similar suits against Kalshi, Polymarket, Robinhood, and Crypto.com. The CFTC counter-sued New York to assert federal jurisdiction over prediction markets. The Senate’s Clarity Act and GENIUS Act (stablecoin rules) both remain in play.

A small but notable quantum computing milestone: a researcher broke a 15-bit elliptic curve key on public quantum hardware, a 512x improvement over the previous record, and won a 1 BTC bounty. This doesn’t threaten Bitcoin today, but the pace of improvement is worth monitoring. An analysis flagged 6.9M BTC (including Satoshi’s coins) as vulnerable without a coordinated cryptographic migration.

Geopolitics and macro

Cannabis reclassification: The DOJ moved marijuana to Schedule III, recognizing medicinal use and giving a massive federal unlock to the $47B cannabis industry. This doesn’t legalize recreational use but opens banking, tax benefits, and institutional capital to cannabis companies.

Meta layoffs: Meta is cutting roughly 8,000 jobs in an AI-first restructuring, targeting non-AI roles to redirect resources toward AI products and infrastructure.

Kevin Warsh clearing toward Fed Chair: The DOJ dropped its probe, removing the last obstacle. Warsh has historically favored tighter monetary policy, and his confirmation would be the biggest shift in Fed leadership since Powell’s appointment.

Yields tell the story: The 2-year yield rose 7bp on the week to 3.78%, the sharpest move on the curve. With oil elevated, Japan CPI running hot (pushing the BoJ toward hawkishness), and PCE inflation expectations revised up to 2.7%, the market is starting to price out rate cuts. Goldman still sees two cuts to 3.0-3.25% by year-end, but only if oil stays below $90. It hasn’t been below $90 since Tuesday.

Other notable developments: A US Army Green Beret was charged for $400K in Polymarket insider trading using classified intelligence about a Venezuela/Maduro raid. Trump hosted the Dutch King at the White House, with semiconductor (ASML) and trade cooperation on the agenda. Virginia voters approved a redistricting overhaul that could flip 4+ House seats to Democrats. Russia seized 1,700 square kilometers in Ukraine this year, advancing on the Donbas fortress belt.

Quick hits

Trump held a private Mar-a-Lago event with Mike Tyson, Tether CEO Paolo Ardoino, and Cathie Wood, telling banks to “back off” crypto legislation
Metaplanet raised $50M in zero-interest bonds for more Bitcoin purchases
A Litecoin 13-block reorg exposed a zero-day consensus vulnerability. GitHub showed a private patch existed four weeks before the attack
Justin Sun sued Trump’s World Liberty Financial over frozen $WLFI tokens; a separate billionaire backer also sued over alleged extortion
Pro-Trump AI influencers flooded Instagram, TikTok, and Facebook in a coordinated pre-midterm campaign, per the NYT
Bank of Korea’s new chief is pushing CBDC and deposit tokens while deliberately excluding stablecoins
36% of Russians plan to buy Bitcoin when the retail crypto framework launches July 1
Satsuma, a BTC treasury company, lost 98.5% from its peak, erasing $1.6B in market cap
Palestinian territories held their first local elections in two decades, including Gaza
Blue Origin’s New Glenn rocket failed on its third launch, putting a satellite in the wrong orbit

What to watch next week

Mega-cap earnings: Microsoft, Meta, Amazon, and Apple all report. These four will determine whether the NASDAQ’s rally has legs or if AI spending expectations need a reset.
FOMC meeting (April 28-29): No rate change expected, but the statement language on inflation and any hint of potential hikes will shape summer positioning.
Iran: With peace talks cancelled and the blockade tightening, any military escalation pushes oil past $100. Any surprise diplomatic breakthrough crashes it below $85. Binary risk.
WHCD shooting fallout: Monday’s market open will price in political risk. Security spending stocks (Axon, Palantir) could get a bid.
Kevin Warsh confirmation: His tone on inflation and rates during the hearing sets expectations for the post-Powell Fed.
Bitcoin at $78K: Rejected at $79-80K resistance multiple times this week. A convincing break above $80K with volume would signal the next leg up toward $85K. Failure keeps it range-bound.