Mideast Tensions Stir Market Risk as Crypto Prices Drop Amid Drone Strikes
Cryptocurrency markets have been impacted by escalating geopolitical tensions following Iran's drone attack on Israel, with major digital currencies experiencing notable declines. Bitcoin, the largest cryptocurrency by market capitalization, fell by 5% from its price on Friday, while Ether, the second-largest, dropped by as much as 10%, and XRP tumbled by 13.5%. This sell-off reflects investors' growing concerns about the potential fallout from increased hostilities in the Middle East.
In response to the Iranian attack, oil prices surged by 3%, with U.S. benchmark oil prices reaching $87 a barrel. The price of gold also initially spiked, surpassing $2,400 an ounce, although it later retreated from these highs. The heightened geopolitical risk has driven investors towards perceived safe-haven assets, causing U.S. Treasury bonds to rally and yields to fall.
The geopolitical uncertainty has also influenced foreign exchange markets, with the U.S. dollar strengthening against a basket of currencies, including a significant drop in the euro to a five-month low. Emerging market currencies have been particularly affected as investors seek stability amidst the crisis. Additionally, the Iranian currency fell to a record high of 705,000 rials to the dollar on the unofficial market.
The White House has expressed its intention to support Israel's defense, and in light of the recent attacks, has moved additional Navy ships towards the region. The situation has prompted concerns that the U.S., Israel's key military ally, could become more directly involved in the conflict with Iran. The stock market in Israel has also reacted, with the main index of the Tel Aviv Stock Exchange, TA-35, experiencing a slight decline.
