ALTERNATIVE MARKETS UPDATE – END APRIL 2025

​In early April 2025, President Trump reignited trade tensions with sweeping tariffs - 10% on all imports and up to 50% for countries with "unfair" practices, hitting China hardest at 145%. China retaliated with up to 125% tariffs, blacklisting US firms and restricting exports of rare earths. Facing global backlash, Trump announced a 90-day delay for most countries (excluding China) and eased tariffs on key sectors like tech and pharma. Markets, initially hopeful over pro-business policies, turned volatile as concerns over aggressive trade moves mounted. The VIX spiked to 60 on Liberation Day - levels not seen since 2008 and 2020. Upon the delay of the tariff implementation, volatility eased quickly, as shown in Figure 1. Volatility levels have dropped to below 25, which is only slightly elevated compared to historical levels.

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RESEARCH PERSPECTIVE VOL. 250 April 2025 Alternative Markets Update In early April 2025, President Trump reignited trade tensions with sweeping tariffs - 10% on all imports and up to 50% for countries with "unfair" practices, hitting China hardest at 145%. China retaliated with up to 125% tariffs, blacklisting US firms and restricting exports of rare earths. Facing global backlash, Trump announced a 90-day delay for most countries (excluding China) and eased tariffs on key sectors like tech and pharma. Markets, initially hopeful over pro-business policies, turned volatile as concerns over aggressive trade moves mounted. The VIX spiked to 60 on Liberation Day - levels not seen since 2008 and 2020. Upon the delay of the tariff implementation, volatility eased quickly, as shown in Figure 1. Volatility levels have dropped to below 25, which is only slightly elevated compared to historical levels. Figure 1: VIX Index and Spread of Low and High Since January 2025, Source: Investing, April 2025 Markets and financial institutions have reacted to the 90-day tariff pause with cautious optimism. Stocks surged initially, and some investors hope the break will lead to meaningful trade deals and renewed stability. Optimists believe the pause offers a valuable window for diplomacy, potentially defusing tensions and averting long-term economic harm. However, many analysts warn that the calm may be short-lived. If substantial progress is not achieved, the return of aggressive tariffs could reignite volatility, harm global supply chains, and deepen the current economic slowdown. The outcome hinges heavily on what is achieved during these 90 critical days. Markets will also likely need to see early signs of potential resolutions to gain confidence that the pause on reciprocal tariffs is meaningful. The US-China trade war remains a major source of global economic uncertainty, with both sides maintaining aggressive tariffs and restrictions on key imports. Adding to market anxiety is the looming threat that China could begin unloading its vast holdings of US Treasury bonds, a move that could destabilize bond markets and push up US borrowing costs even further. The lack of clear progress toward a resolution keeps investors on edge, with any escalation potentially triggering renewed market turmoil. Equity markets diverged sharply in early 2025, with Europe leading the way - up nearly 15% by February - while China remained flat after a cautious start. In contrast, US stocks saw a steady downtrend, reversing early gains and falling around 5% by March due to growing concerns over Trump’s aggressive trade policies. "Liberation Day" marked one of the steepest stock market losses in history across all regions. The 90-day delay then resulted in one of the strongest rebounds. The past two weeks have been beneficial for the global equity market, which has nearly regained all the losses incurred from Liberation Day and has even entered a small rally. This recovery's sustainability heavily depends on the outcome of Trump’s tariff policy in the near future. Surprisingly, despite the US's Q1 GDP contraction, markets have risen, largely due to strong corporate earnings. However, with looming tariffs, future corporate earnings remain at risk. Currently, European equities are up 5% YTD, compared to a 5% loss in the US. China is positioned in the middle, with losses of around 1.5%, as shown in Figure 2. Outlooks on equities, in particular, in the US are highly segregated. Hedge funds are well positioned to weather the storm successfully, due to their wide variety of strategies and skillset. Figure 2: Global Equity Performance Since January 2025, Source: Investing, April 2025 In 2025, the private equity industry has been strained by economic uncertainty under the Trump administration, with tariffs contributing to disrupted supply chains and margin pressures. The slowdown in deal-making, coupled with delayed exits, has driven a growing reliance on liquidity. Amid this environment, the secondary market has become particularly active, with investors eager to offload or acquire stakes in existing funds. Despite regulatory scrutiny and market headwinds, private equity firms are adapting by tapping private credit and repositioning for long-term opportunities. In addition to the geopolitical uncertainty caused by reciprocal tariffs, the war between Russia and the Ukraine also regained the spotlight, especially due to Trump’s goal of a resolution during his first 100 days in office. Talks between the US and Russia commenced in Riyadh without Ukraine’s participation, with the goal of laying the groundwork for a potential ceasefire. Ukraine later agreed to a proposed 30-day truce, contingent on Russia’s acceptance. In a key breakthrough, the US and Ukraine finalized an economic agreement that grants the US access to vital minerals. In the deal, a joint fund for Ukraine’s postwar reconstruction is included. The US also waived its demand for repayment of previous military aid as part of the deal. Despite these efforts, tensions remain elevated following renewed Russian missile strikes on Kyiv, prompting President Trump to call on President Putin to deescalate and engage in serious peace negotiations. Gold prices have surged in 2025, reaching an all-time high of $3,500 per ounce in April, driven by geopolitical tensions, economic uncertainty, and robust central bank purchases, particularly from Asian nations. Investor demand has also been strong, with Q1 gold investment flows rising 170% year-over-year, the highest since early 2022. ​However, recent signs of easing US-China trade tensions have led to a consolidation in gold prices, which have dipped to around $3,205 per ounce. Figure 3 shows the impressive development of the gold price during 2025. Despite this pullback, analysts remain bullish, with forecasts suggesting prices could reach $3,700 by the end of 2025, as investors continue to seek safe-haven assets amid ongoing economic risks. Figure 3: Gold Price and Performance Since January 2025, Source: Investing, April 2025 The cryptocurrency market in 2025 has experienced significant volatility, influenced by macroeconomic factors, regulatory developments, and institutional activities. Bitcoin reached a historic peak near $109,000 following President Donald Trump's inauguration but corrected amid investor concerns over delayed Federal Reserve rate cuts alongside a global market selloff. During the selloff, Bitcoin briefly fell below $80k. The asset showed remarkable stability losing only 20% YTD at the time at par with the Nasdaq. Other cryptocurrencies lost significantly more. Ethereum and Solana lost more than 50% and 40% during that time, as shown in Figure 4. Despite these fluctuations, the market has shown resilience, with renewed optimism driven by institutional interest and evolving regulatory landscapes.​ Cryptocurrency market data is showing promising signs for the industry in the short-term. On-chain data from cryptocurrencies suggests that the market is much active than it has been in the past. Investors also poured substantial amounts of money in the space, as $3.4bn alone flew into Bitcoin and Ethereum ETFs. For Solana, its futures have registered the largest open interest in history, while Ethereum readying for another major upgrade going live next week. Figure 4: YTD Performance of Bitcoin, Ethereum & Solana Since January 2025, Source: Pantera Capital, April 2025 STONE MOUNTAIN CAPITAL Stone Mountain Capital is an advisory boutique established in 2012 and headquartered in London with offices Pfaeffikon in Switzerland, Dubai and Umm Al Quwain in United Arab Emirates and Tallinn in Estonia. We are advising 30+ best in class single hedge fund and multi-strategy managers across equity, credit, and tactical trading (global macro, CTAs and volatility). In private assets, we advise 10+ sponsors and general partners across private equity, venture capital, private credit, real estate, capital relief trades (CRT) by structuring funding vehicles, rating advisory and private placements. 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