Cryptocurrency prices fell on Saturday evening after Iran launched a wave of drones toward Israel, an early sign of the turmoil that could hit markets as investors begin to price in the threat of a broader Middle East war.
According to the data, Bitcoin is down 5% compared to Friday, while Ether is down more than 7% and XRP is down 13.5% CoinMarketCap. This is a sign that risk assets will come under pressure.
A fuller picture of Wall Street’s reaction to Iran’s first large-scale military attack on Israel comes on Sunday evening when futures trading for stocks, bonds, commodities and currencies opens in the USA.
Friday’s trading offered some preview of what to expect. At the time, it was said that an Iranian attack on Israel was expected within two days. Increase in US reference oil prices by up to 3% to over $87 per barrel.
U.S. Treasury bonds also rallied sharply, sending the 10-year yield down as much as 10 basis points as investors sought safety.
Likewise, the US dollar rose as geopolitical tensions caused investors to turn away from riskier emerging market currencies.
Even the euro fell to a five-month low against the greenback as markets also weighed the prospect of a rate cut by the European Central Bank ahead of the Federal Reserve.
Meanwhile, prices for gold – traditionally viewed as another safe haven – rose to a new record high above $2,400 an ounce before reversing those gains later late Friday.
There was a sell-off in stocks on Friday, led by risk-on technology stocks, as investors also digested bank earnings and new inflation data that further dampened hopes of imminent Fed rate cuts.
Tensions in the Middle East have increased since Iran-backed militants attacked Israel in October. Other Iranian-backed groups in Lebanon, Iraq, Syria and Yemen have also fired rockets at Israel.
Recently, Tehran blamed Israel for an April 1 airstrike in Syria that killed two Iranian generals, although Israel has not addressed it.
Iran’s attack on Israel increases the risk that the USA – Israel’s most important military ally – could also become involved in direct conflicts with Iran. On Saturday, the White House pledged to support Israel’s defense after deploying more Navy ships to the region in anticipation of an attack.