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Markets show first signs of risk from broader Middle East war as cryptocurrency prices fall after Iran launches drone wave on Israel
Cryptocurrency prices fell Saturday evening after Iran launched a wave of drones on Israel, marking an early sign of the turmoil that could hit markets as investors begin to price in the threat of a broader war in the Middle-East.
Bitcoin was down 5% from its price on Friday, while ether fell more than 7% and XRP fell 13.5%, according to CoinMarketCap. This is a sign that risky assets will be under pressure.
A Fuller Picture of Wall Street’s Reaction Iran’s first-ever large-scale military attack on Israel will take place Sunday evening, when futures trading opens in the United States for stocks, bonds, commodities and currencies.
Friday’s trading offered a glimpse of what to expect. Reports at the time indicated that an Iranian attack on Israel was expected within two days, drive up U.S. benchmark oil prices up 3% to reach $87 per barrel.
U.S. Treasury bonds also rallied sharply, pushing the 10-year yield down as much as 10 basis points as investors sought safety.
Likewise, the U.S. dollar rose as geopolitical tensions caused investors to shy away from riskier emerging market currencies.
Even the euro fell to a five-month low against the greenback, as markets also priced in the prospect of a rate cut by the European Central Bank ahead of the Federal Reserve.
Meanwhile, gold prices – traditionally seen as another safe haven – hit a new record high above $2,400 an ounce before later reversing those gains on Friday evening.
Stocks sold off on Friday, led by risky technology stocks, as investors also digested bank profits and new inflation data that further dimmed hopes of an imminent Fed rate cut .
Tensions in the Middle East have escalated since Iran-backed militants attacked Israel in October. Other Iranian-backed groups in Lebanon, Iraq, Syria and Yemen have also launched rockets into Israel.
More recently, Tehran accused Israel of being responsible for the April 1 airstrike in Syria that killed two Iranian generals, although Israel did not respond to that question.
With the Iranian attack on Israel, the risk increases that the United States – Israel’s most important military ally – will also be drawn into direct engagements with Iran. The White House on Saturday pledged support for Israel’s defense, after moving more Navy ships to the region in anticipation of an attack.
This story was originally featured on Fortune.com