Cryptocurrency prices fell Saturday evening after Iran launched a wave of drones at Israel, signaling an early indication of the turmoil that could hit markets as investors begin to price in the threat of a broader war in the Middle East .
According to CoinMarketCap, Bitcoin fell 5% from Friday’s price, while ether fell more than 7% and XRP fell 13.5%. This is a sign that risky assets will come under pressure.
A fuller picture of Wall Street’s reaction to Iran’s first large-scale military attack on Israel will be available Sunday evening, when futures trading for stocks, bonds, commodities and currencies opens in the United States.
Friday’s trading offered something of a preview of what to expect. Reports at the time said an Iranian attack on Israel was expected within two days, sending benchmark U.S. oil prices up as much as 3% to above $87 a barrel.
U.S. Treasuries also rallied sharply, sending the 10-year yield down as much as 10 basis points as investors sought safety.
Likewise, the US dollar appreciated as geopolitical tensions caused investors to move away from riskier emerging market currencies.
The euro also fell to five-month lows against the greenback as markets also weighed the prospect of the European Central Bank cutting rates before the Federal Reserve does.
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 on Friday, led by risk-on technology stocks, while investors also digested bank earnings and new inflation data that further dampened hopes of imminent Fed rate cuts.
Tensions in the Middle East have risen since Iranian-backed militants attacked Israel in October. Other Iranian-backed groups in Lebanon, Iraq, Syria and Yemen also fired rockets at Israel.
More recently, Tehran blamed Israel for the April 1 airstrike in Syria that killed two Iranian generals, although Israel did not address the issue.
With Iran attacking Israel, the risk is growing that the United States – Israel’s most important military ally – could also become involved in direct clashes with Iran. On Saturday, the White House vowed to support Israel’s defense after moving more Navy ships to the region in anticipation of an attack.