Cryptocurrency prices fell Saturday night after Iran launched a wave of drones into Israel, an early sign of the turmoil that could hit markets as investors begin to weigh in on the threat of a wider war in the Middle East.
Bitcoin fell 5% from its price on Friday, according to the data, while Ether fell more than 7% and XRP fell 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-ever full-scale military attack on Israel will emerge Sunday evening when futures trading in stocks, bonds, commodities and currencies opens in the United States.
Friday’s trading provided a preview of what to expect. Reports at the time said an Iranian attack on Israel was expected within two days, causing benchmark U.S. oil prices to rise as much as 3% to more than $87 a barrel.
U.S. Treasuries also rose sharply, sending the 10-year yield down 10 basis points as investors sought safety.
Likewise, the US dollar rose as geopolitical tensions sent investors away from riskier emerging market currencies.
Even the euro fell to a five-month low against the US dollar as markets also weighed the prospect of the European Central Bank cutting rates ahead of the Federal Reserve.
Meanwhile, gold prices, traditionally seen as another safe-haven asset, rose to a new record high above $2,400 an ounce before reversing those gains late Friday.
Stocks sold off Friday, led by risky technology stocks, as investors also digested bank earnings and fresh inflation data that further dampened hopes of an imminent Fed rate cut.
Tensions have been rising in the Middle East since Iranian-backed militants attacked Israel in October. Other Iranian-backed groups in Lebanon, Iraq, Syria and Yemen have also fired missiles at Israel.
Most recently, Tehran blamed Israel for the April 1 airstrike in Syria that killed two Iranian generals, although Israel has not responded to the matter.
As Iran attacks Israel, there is a growing risk that the United States—Israel’s most important military ally—could also be drawn into direct clashes with Iran. The White House on Saturday vowed to support Israel’s defense after sending more Navy ships to the region in anticipation of an attack.