Cryptocurrency prices fell after Iran launched a wave of drones toward Israel on Saturday night, raising concerns about the potential impact on the market as investors begin to price in the threat of a broader Middle East war. It showed early signs of some confusion.
Bitcoin is down 5% from Friday's price, Ether is down more than 7% and XRP is down 13.5%, according to CoinMarketCap. That's a sign that risk assets are under pressure.
The full extent of Wall Street's reaction to Iran's first-ever full-scale military attack on Israel will be revealed Sunday night when stock, bond, commodity and currency futures trading begins in the United States.
Friday's trading provided some preview of what to expect. Reports at the time said an Iranian attack on Israel was expected within two days, sending benchmark U.S. crude oil prices up as much as 3% to over $87 per barrel.
U.S. Treasuries also rebounded sharply, with the 10-year Treasury yield dropping as much as 10 basis points as investors sought safety.
Similarly, the US dollar strengthened as geopolitical tensions drove investors away from riskier emerging market currencies.
The euro also fell to a five-month low against the dollar as the market considered the possibility that the European Central Bank would cut interest rates before the Federal Reserve.
Meanwhile, the price of gold, traditionally considered another safe-haven asset, soared to an all-time high of more than $2,400 an ounce after reversing its gains late Friday.
Stocks sold off Friday, led by risk-on tech stocks, as investors digested bank earnings and the latest inflation data, further weakening expectations for an impending Fed rate cut.
Tensions in the Middle East have been high since Iranian-backed militants attacked Israel in October. Other Iranian-backed groups in Lebanon, Iraq, Syria and Yemen also fired rockets at Israel.
Israel recently blamed Iran for the April 1 airstrike in Syria that killed two Iranian generals, but Israel has not mentioned this.
Iran's attacks on Israel increase the risk that the United States, Israel's most important military ally, will also be drawn into direct conflict with Iran. The White House vowed on Saturday to help Israel defend itself, after moving more naval vessels toward the region in anticipation of an attack.
