Wall Street opened in the red as a new escalation of the US-Iran war sent investors fleeing risk-adjusted assets, which plunged nearly $1 trillion in market value at the start of trading. Trigger: Iran has responded to the new US strike by launching a threat attack in American military bases across several Gulf states.
This is now the sixth straight day of open fighting. The US and Iran have escalated threats beyond military targets, raising fears of a return to full-scale war without an agreement reached on the Strait of Hormuz. During the night, the US military hit the south of Iran, and hit six bridges according to the Iranian media, separately. reports Attacks near Bushhr – home to the country’s only nuclear power plant – and Lorestan province.
The stock market’s reaction has been alarming in the books: very low interest rates, high oil prices, and safe havens.
Why did $1 trillion go missing in public?
Two things distracted businessmen at the same time – a direct attack on US bases and a threat to global power. Kuwait launched its air defenses against missile and drone attacks, Qatar said it was hit by missiles heard in Doha, and sirens went off in Bahrain after Iran said it targeted US jets at Sakhir Air Base.
The power angle is the most effective. The Strait of Hormuz, located between Oman and Iran, is one of the world’s most critical energy chokepoints, often taking in about 20% of the world’s oil supply. With Tehran seeking to control the waterway, any disruption will raise fears of price hikes – and that’s what’s driving down the price index.
What is happening to oil prices?
Crude is rising rapidly as the blockade drags on. Brent crude futures rose 2.8% to trade at around $78.14 a barrel, while US West Texas Intermediate rose 2.5% to $73.24. High oil means higher commodity prices, higher inflation, and less room for lower prices – a dangerous mix for stocks and risky assets like crypto.
Will crypto be affected?
It’s already. As the image from CoinMarketCap shows, major coins are glowing red in the 24-hour and 7-day window. $BTC trading at around $63,407, down 1.78% for the day and 1.24% for the week. $ETH it is close to $1,830, up 3.03% in 24 hours. $BNB (- 2.93%), $XRP (-2.35%), and $SOL (-2.55%) are both low.
Right now the hit is modest – a small dip, not capitulation. But that is exactly the point of caution. In every episode of this debate, crypto has traded like a high-risk beta asset, trading in charity and money rather than as a safe haven. If Wall Street’s opening loss of $1 trillion expands into a sustained selloff, the crypto portfolio follows – and often amplifies – the move. Using this mechanism means that a sharp downward leg can lead to a gradual decline across BTC and altcoins.
The caveat is simple: The recent crypto dip seems small, but it is directly related to the rapidly growing activity without any decision. A single topic – a closed Strait, a US casualty, the expansion of the Gulf – could turn today’s red tape into something much higher. Traders with high positions should be especially alert to the risk at night when the heads move quickly.
What should followers look for?
Three factors are important from now on: any confirmation of the death of the US (which historically leads to greater instability), what is happening in the Strait of Hormuz, and if oil can break even more than it was before. Anyone can increase the tone of the threat and put additional pressure on crypto.
