President Donald Trump took another jab at Iran, threatening to obliterate its economy and eliminate its leadership if it did not finalize a deal. Iranian intelligence also said that the US and its allies are preparing a large-scale strike. Iran has warned the US of “painful retaliation” across the Middle East. With geopolitical tensions at an all-time high, let’s discuss how the US-Iran conflict may impact the stock and cryptocurrency markets.
Will The US-Iran Conflict Lead To A Stock And Cryptocurrency Market Crash?
The most troubling part about the US-Iran conflict from an economic standpoint is the impact it has on oil prices. Higher oil prices directly leads to higher inflation. Inflation in the US has been a concern for the Federal Reserve, which decided to raise interest rates by 25 basis points after its recent FOMC (Federal Open Market Committee) meeting. Higher rates often leads to less risky investments, with the cryptocurrency market historically dipping under such circumstances.
If the war in the Middle East escalates, we could see oil prices surge to new heights. Retail investors could chose to move away from stocks and cryptocurrencies, and move their funds to safer bets, such as gold and other commodities.
The US-Iran conflict began in February of this year, and is showing no signs of cooling off. Both nations got close to making a deal, but the Iranians walked away due to continued threats. Khatam al-Anbia Central Headquarters of Iran recently stated that “If the US makes any mistake against the Islamic Republic of Iran, all its positions and interests in the region will be targeted by sustained, effective and painful attacks.“
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If the US-Iran conflict escalates further, there is a high chance that investor sentiment will take a blow and the stock and cryptocurrency markets may plummet.
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