Cryptocurrency prices fell on Tuesday as geopolitical tensions flared following Iran’s missile attacks on Israel. Ethereum It fell below $2,500.
Uncertainty spooked investors in global markets and directed them to safer assets such as bonds, dollars and gold.
Analyst Speaks After Iran-Israel Conflict
Commenting on the reaction of the markets, Quinn Thompson, founder of Lekker Capital, stated that there is hope that Iran’s reaction will be measured. But the potential for escalation in the Middle East is causing widespread concern.
“Even if there is only a 20% chance of a major escalation in the Middle East, markets should reprice to reflect this risk as the outcome could be catastrophic,” Thompson said. Thompson also underlined the political consequences of the conflict, saying an escalation could increase former President Donald Trump’s electoral chances in the upcoming US presidential election.
Beyond geopolitical risks, Thompson noted that this week’s economic calendar (which will culminate in a major U.S. jobs report) is another factor causing caution in markets. The fact that many investors carried out routine hedging transactions further contributed to today’s sell-off.
The broader stock market was also hit, with the Nasdaq falling 1.5% in early trading as investors fled risky assets. Although Bitcoin, often referred to as “digital gold,” is sometimes seen as a safe haven, it was not immune from the decline and briefly dipped below $62,000.
Thompson explained that markets are overbought on optimism in both crypto and stocks. “Given how overpriced many assets were based on technical indicators, they were more vulnerable to declines when bad news arrived,” he said.
*This is not investment advice.
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