- Stocks and crypto plunge as attack on Israel begins.
- Bitcoin briefly dips below $62,000. Solana continues to trade below $150.
Investors are fleeing stocks and cryptocurrencies as Israel prepares for an Iranian attack.
The global market capitalization of all cryptocurrencies has fallen about 5.5% since Monday, according to CoinGecko data.
Ethereum and Solana were the biggest losers among the top 10 cryptocurrencies, falling below $2,500 and $150, respectively.
Sirens sounded across Israel around 7:30 p.m. local time, according to Israeli newspaper Haaretz, with explosions heard in Jerusalem and Tel Aviv.
The missiles were launched just hours after it was announced that Iran was preparing to strike Israel following its repeated bombings against its ally Hezbollah in Lebanon.
The attack reignited long-standing fears 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 remain relatively quiet, given the likelihood that all-out war would boost Republican Donald Trump’s electoral chances in November’s U.S. presidential election.
“Nevertheless, markets are a discounting mechanism, and even if there is only a 20% chance of a major escalation in the Middle East, given the severity of the consequences for markets, they must re-evaluate prices to take this into account.” Thompson said DL News.
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“On top of that, it’s an important week for economic data, culminating with another jobs report on Friday, so it’s also fair to expect some routine coverage before then.”
Stocks fell Tuesday, with the Nasdaq falling 1.5% after markets opened. Meanwhile, investors turned to more conservative assets like bonds, the dollar and gold.
While Bitcoin is often referred to as “digital gold” by its supporters, it also suffered losses on Tuesday, briefly falling below $62,000.
Thompson said that was normal. In both stocks and cryptocurrencies, there was a lot of optimism and many assets were overpriced based on technical indicators, he explained.
Because the market was already overconfident and the assets were overbought, Thompson said, this made them more likely to fall in the event of bad news.
Aleks Gilbert is DL News‘ DeFi correspondent based in New York. You can reach him at aleks@dlnews.com.
