Digital Gold and the $1.2 Trillion Question

July 13, 2025•8 min read

As the city empties and the world slows for summer, markets continue their quiet choreography beneath the gentle hum of out-of-office replies. Whether you’re enjoying a sun-drenched terrace, a shaded garden table, or a breezy rooftop, consider this your invitation to a more refined summer brunch of market insights… think cold brew in a crystal tumbler, a twist of lemon, and perhaps a pastry or two.

Let’s settle in and savour the week that was.

Recap: Where We Left Off (Week 27)

Markets drifted higher, the GENIUS Act made waves in the stablecoin world, and the “picks and shovels” play in digital gold was the talk of the town. The macro story: liquidity is king, and the Fed’s September rate cut remains the market’s favourite summer narrative.

Please click here to see last week: Digital Gold, Real Impact: How the GENIUS Act Is Rewriting Liquidity

This Week: Still Drifting, But the Underlying Currents Are Strong

US & Global Equities

S&P 500 and Nasdaq: Another week of modest gains, with US equities nudging new all-time highs with tech still leading, AI and chip stocks at the forefront. Volumes were light, but the “buy the dip” crowd remains in control. Small caps outperformed large caps, as hopes for rate cuts and easing geopolitical tension buoyed sentiment.
Europe: FTSE 100 and DAX were steady, with European equities lagging the US and analysts turning more neutral on further upside in the second half. The euro’s strength remains a theme, supporting cross-border flows but capping export optimism.
Emerging Markets: EM equities outperformed developed markets, with Taiwan and Brazil leading on tech exposure and policy stability.

Gold and Digital Assets

Gold: Still hovering near record highs, as investors hedge against inflation, policy risk, and the ever-present threat of a geopolitical flare-up.
Bitcoin & Crypto: Bitcoin consolidated near highs, with ETF inflows returning in force and digital asset market cap climbing. The big news: the SEC approved a multi-asset ETF (Solana, XRP, Cardano), and stablecoins saw another surge in adoption and market cap.

Macro & Policy

Fed & Rates: September rate cut odds unchanged at ~71%. The Fed is in “wait and see” mode, and the market is content to drift along with it.
US Politics & Trade: Tariff rhetoric remains noisy, but no new shocks. The White House’s focus is on stablecoin legislation, with the GENIUS Act now in the House and debate intensifying.
GENIUS Act Update: The bill sits in the House, with hearings scheduled and competing proposals (the STABLE Act) in play. The President has called for passage “without delay.” The GENIUS Act’s strict 1:1 reserve and monthly audit requirements are already reshaping issuer behavior and attracting new institutional players.
Europe & UK: ECB and BoE remain on hold. The euro’s strength is fueling euro-backed stablecoin growth and capital flows.

Weekly Market Table

What’s Pertinent This Week?

4th July: Trump’s “Big Beautiful Bill” Signed
President Trump marked Independence Day by signing the “One Big Beautiful Bill” into law, his flagship economic package. The bill delivers sweeping tax cuts extending the 2017 Tax Cuts and Jobs Act, introducing zero taxes on tips up to $25,000, and tax-free overtime pay up to $12,500. While the bill omits direct crypto tax reforms, its aggressive fiscal stimulus and projected $3–5 trillion increase in national debt are expected to fuel inflationary pressures and may drive further demand for Bitcoin and digital assets as alternative stores of value. Markets are parsing the implications for risk assets, with the crypto sector eyeing potential tailwinds from looser financial conditions and increased disposable income.

Trump’s Tariff Letters: Global Trade Tensions Escalate
In a dramatic escalation, President Trump issued a wave of tariff letters to more than 20 countries this week, including major partners like Japan, South Korea, Brazil, and the Philippines.

The letters outline new reciprocal tariff rates (ranging from 20% to 50%) set to take effect August 1. Notably, copper imports face a 50% tariff, and the BRICS nations are targeted with a 10% levy. Trump has made clear there will be no further deadline extensions, and “a letter means a deal.”

The rapid-fire tariff moves have cast a shadow over global trade and business sentiment, with only the UK and Vietnam reaching deals so far. The EU is negotiating for a reprieve, and China has agreed to a temporary truce.
Digital Gold Infrastructure, Stablecoin Expansion & Europe’s Digital Push
The “picks and shovels” play is heating up, and stablecoins are now the backbone of digital liquidity. The stablecoin market cap has surged to $255 billion, with Tether commanding a 65% share and USDC seeing robust inflows. Regulatory clarity from the GENIUS Act and MiCA is fueling institutional adoption and cross-border flows, while Circle’s IPO and new ETF launches highlight the sector’s momentum.
Europe announced over €20 billion in new hyperscale data center investments, underscoring the continent’s digital transformation drive. Exchanges, custodians, compliance analytics, and wallet providers are all jockeying for position as the rails of the digital asset economy get built out. The infrastructure boom is not just about technology, but about liquidity, compliance, and scale.
Safe Havens Hold & Volatility Remains Subdued
Gold and Bitcoin remain the assets of choice for hedging policy and geopolitical risk. The VIX drifted to multi-month lows, but with tariffs, Fed minutes, and earnings in focus, volatility could quickly return.
US Jobs Data Surprises
A stronger-than-expected US jobs report pushed yields higher and briefly revived dollar strength, tempering the odds of a near-term Fed rate cut.

Private Equity’s Macro Insights

Dry Powder and Deployment Pressure: The Defining Challenge

The private equity world in mid-2025 is defined by one word: dry powder. Global buyout dry powder sits at a staggering $1.2 trillion, with nearly a quarter of this capital uninvested for over four years, a historic high that is both opportunity and burden for fund managers. This unprecedented stockpile is the result of years of robust fundraising, cautious dealmaking, and a slowdown in exits as public markets and IPO windows remain challenging.

Yet, the pressure to deploy is mounting. Investment periods are ticking down, limited partners (LPs) are demanding action, and the clock is running on funds raised during the 2020–2022 boom. As deadlines approach, managers face a delicate balancing act: deploy capital efficiently without compromising on discipline, or risk returning uninvested commitments and eroding investor confidence.

The deployment dilemma is compounded by several factors:

Deal volume remains subdued: Despite a rebound in Q1, deal counts are still below historical averages, and the market is skewed toward larger, more strategic transactions rather than the frenzied activity of previous years.
Valuation gaps persist: Sellers remain anchored to 2021 price expectations, while buyers are increasingly selective, leading to protracted negotiations and fewer completed deals.
Exit bottlenecks: With IPO activity still muted and strategic buyers cautious, exits have slowed, limiting distributions back to LPs and creating a feedback loop that further constrains new fundraising.

For private equity, the abundance of dry powder is both a safety net and a source of risk. On one hand, it provides the firepower to seize opportunities as market conditions improve, potentially supporting asset prices and offering a floor to valuations. On the other, the pressure to invest can lead to rushed decisions or a drift into riskier assets, especially as investment deadlines loom.

The coming months will test the discipline and creativity of managers. Those able to deploy capital thoughtfully, focusing on operational value creation, sector rotation, and alternative strategies like secondaries and private credit, will be best positioned to deliver for investors in a market where capital is no longer scarce, but opportunity is.

From Regulation to Rails: The Picks and Shovels of Digital Liquidity

The GENIUS Act is more than a crypto story … it’s a liquidity story. Every new stablecoin minted is a dollar of demand for US Treasuries, and institutional adoption is accelerating. The infrastructure play … owning the rails, not just riding the train … remains the most reliable way to profit as digital assets go mainstream. The winners will have scale, compliance, and trusted brands. Whether it’s new ETF launches, blockchain analytics, or custody solutions, the best returns may come from enabling the rush and not chasing the prize. The lesson from the gold rush holds true: own the toll booths and platforms that power the digital gold ecosystem.

Interest Rates: The Waiting Game

With the Fed in “wait and see” mode, the playbook is unchanged: line up deals, but don’t chase yield. The real action is happening in digital liquidity and infrastructure, not in chasing the last basis point of return.

Ed’s Final Word

Week 28 was a reminder that sometimes the most important market moves are the ones happening quietly, as regulation and infrastructure lay the foundation for the next wave. For private equity and risk asset investors, the message is clear: watch the rails, not just the riders. The digital gold rush is accelerating, and the best opportunities are for those building the tools everyone else needs.

As always, these are my thoughts and opinions alone. Please do your own research before making investment decisions, and reach out to your Beaufort relationship manager for queries or follow-ups.