Bitcoin has managed to hold steady to the green with stocks plunging after United States President Donald Trump publicly sided with Israel in its ongoing feud with Iran. The markets took a beating early Tuesday as the president warned American citizens to leave Tehran, the capital of Iran.
The effect was instantly felt, with Dow futures dropping by 136 points, the S&P 500 losing 0.34%, and the Nasdaq 100 slipping nearly 0.4% before the market opened. Crude oil futures jumped 2% overnight, with West Texas Intermediate leading the charge as investors reacted to growing geopolitical risks. “Iran should have signed the ‘deal’ I told them to sign. What a shame, and waste of human life. Simply stated, IRAN CAN NOT HAVE A NUCLEAR WEAPON. I said it over and over again!” Trump said in another post.
Bitcoin holds steady as stocks drop
Earlier Monday, Wall Street had closed with gains. The Dow Jones Industrial Average added over 300 points, the S&P 500 climbed about 0.9%, and the Nasdaq Composite gained 1.5%. That short-lived rally was driven by easing oil prices after the spike on Friday that followed Israel’s airstrikes on Iran. Both Brent crude and West Texas Intermediate settled more than 1% lower during Monday’s session before bouncing back overnight on Trump’s warnings.
Meanwhile, Bitcoin remained largely unmoved, with the token staying above $107,000 after it retook the level on Monday. The asset did not move despite the turmoil across equities as the turmoil escalated. At the same time, gold dropped to $3,393, falling below the $3,400 level. Traders had expected the usual safe haven behavior, but Bitcoin held firmer than gold this round, though that isn’t really impressive.
Last night signaled the fourth day of the Israel-Iran feud. According to NBC News, Iran had reached out to Saudi Arabia, Qatar, and others asking them to convince Trump for a ceasefire. The request showed that Iran was ready to offer flexibility on nuclear negotiations if the White House convinced Israel to back down. Instead, Trump made it clear he was not going to meddle, taking a public and hard-line stance.
Jeff Buchbinder, chief equity strategist at LPL Financial, explained that Israel’s main focus is stopping Iran from becoming a nuclear threat. He added that the longer-term objective may be regime change in Tehran, though it’s unclear whether that’s achievable. Buchbinder said that while every conflict is unique, data from 25 geopolitical events since 1941—including the Pearl Harbor attack—shows an average stock market drop of 4.6% over about 19 days, with recovery usually taking around 40 days. The current dip in futures may just be the beginning if the escalation continues.
Investors have also been watching domestic data closely. Retail sales numbers for May are due on Tuesday, and it could give further insight into consumer demand amid worries about inflation. Meanwhile, the real focus is on the Federal Reserve policy meeting billed for Wednesday. The CME FedWatch tool shows traders are betting heavily that the Fed will keep interest rates steady, sticking with the 4.25% to 4.50% range. That decision, however, may not be enough to calm markets already rattled by events in the Middle East.