Cash News
- Equities, crypto plunge as attack on Israel begins.
- Bitcoin briefly dips below $62,000. Solana continues trading below $150.
Investors are fleeing equities and crypto as Israel girds for an attack from Iran.
The worldwide market cap of all cryptocurrencies has fallen about 5.5% since Monday, according to data from CoinGecko.
Ethereum and Solana were the biggest losers among top 10 cryptocurrencies, falling below $2,500 and $150, respectively.
Sirens went off across Israel around 19:30 local time, according to Israeli newspaper Haaretz, with explosions heard in Jerusalem and Tel Aviv.
The missiles launched just hours after news broke that Iran was preparing to strike Israel over its repeated bombing of allied Hezbollah in Lebanon.
The attack has flamed long-running fear that Israel’s campaign against Iranian proxies in the Middle East — a group that includes Hamas in Gaza and the Houthis in Yemen — could lead to direct conflict between the two regional powers.
Lekker Capital founder Quinn Thompson said the prevailing sentiment was that Iran would keep its response relatively muted, given the likelihood that an all-out war would boost the electoral odds of Republican Donald Trump in the United States presidential election in November.
“Nonetheless, markets are a discounting mechanism, and even if there is only a 20% chance of a major escalation in the middle east, given how bad of an outcome that is for markets, they must re-rate pricing to reflect that,” Thompson told DL News.
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“On top of this it is a big week for economic data culminating in another jobs report on Friday so it’s also fair to expect some routine hedging ahead of that as it is.”
Stocks fell on Tuesday, with the Nasdaq dropping 1.5% after markets opened. Meanwhile, investors fled to more conservative assets like bonds, the dollar, and gold.
While Bitcoin is often called “digital gold” by its proponents, it too suffered losses Tuesday, briefly dropping below $62,000.
Thompson said that was to be expected. In both stocks and crypto, there was a lot of optimism, and many assets were priced too high based on technical indicators, he explained.
Because the market was already overconfident and assets were overbought, according to Thompson, it made them more likely to drop when any bad news hit.
Aleks Gilbert is DL News’ New York-based DeFi correspondent. You can reach him at [email protected].