Cryptocurrency prices fell on Tuesday, with Ethereum dropping below $2,500 as geopolitical tensions flared following Iranās missile attacks on Israel.
Uncertainty has spooked investors in global markets, driving them into safer assets such as bonds, dollars and gold.
Analyst Speaks After Iran-Israel Conflict
Commenting on the market reaction, Quinn Thompson, founder of Lekker Capital, said there was hope that Iranās response would be measured, but the potential for escalation in the Middle East is causing widespread concern.
āEven if there is only a 20% chance of a major escalation in the Middle East, markets should reprice to reflect that risk because the outcome could be catastrophic,ā Thompson said. He also highlighted the political ramifications of the conflict, saying an escalation could boost former President Donald Trumpās chances in the upcoming US presidential election.
Beyond geopolitical risks, Thompson noted that this weekās economic calendar ā culminating in a major U.S. jobs report ā was another factor driving caution in markets, with many investors performing routine hedging, further contributing to todayās selloff.
The broader stock market also took a hit, with the Nasdaq down 1.5% in early trading as investors fled riskier assets. Bitcoin, often referred to as ādigital gold,ā is sometimes seen as a safe haven, but it too was not immune to the decline, briefly falling below $62,000.
Thompson explained that markets were overbought on optimism in both crypto and stocks. āGiven how overpriced many assets were based on technical indicators, they were more vulnerable to a downside when bad news came,ā he said.
