Cryptocurrencies plummeted as Israeli airstrikes on Iranian nuclear and missile sites rocked global sentiment and prompted investors to flee risky assets.
Bitcoin (BTC), considered by some to be a safe-haven investment, fell 2.9%. Gold futures, a more traditional safe haven, rose 1.3% from their closing price.
Israeli Prime Minister Benjamin Netanyahu said the overnight attack, which also targeted Iran's top military leaders, was aimed at rolling back Iran's nuclear program and missile capabilities. Iran, which has repeatedly called for Israel's destruction, responded by launching 100 suicide drones toward Israeli territory, though a more concerted response is expected.
The strike came less than 24 hours after the International Atomic Energy Agency said Iran was not complying with uranium enrichment limits. The United States has said it was not involved in the attack, which killed some of Iran's top military leaders.
The escalation saw risk assets fall across the board. Japan's Nikkei fell about 0.9%, US index futures fell 1.2%, and the Euro Stoxx 50 lost 1.35%. US crude oil futures, on the other hand, rose more than 6% to $73, with Brent crude rising as much as 14% at one point. Gold climbed to $3,445 an ounce, nearing its all-time high.
Cryptocurrency declines led to gains earlier in the week amid speculation about ETF approval. Solana's {{SOL}}, in particular, had rallied on reports that the SEC had asked ETF issuers to update their S-1 filings, potentially accelerating the launch timeline. SOL is down nearly 9.5% in the past 24 hours.
“Overnight, reports surfaced that the SEC asked Solana ETF issuers to update their S-1 filings, triggering a strong rally in SOL,” said Jake Ostrovskis, an over-the-counter trader at Wintermute.
“Bloomberg ETF analysts Eric Balchunas and James Seyffart remain optimistic, assigning a 90% probability of approval by year-end, with potential approvals as early as July or within three to five weeks following updated filings,” Ostrovskis said.
As a result, he said, the market is "now relatively underexposed to SOL and related assets, which makes the current setup particularly interesting to watch."
Despite optimism and growing inflows into spot crypto ETFs, with BTC funds bringing in $939 million monthly to date and ETH seeing $811 million in net inflows, investors are now focused on the Middle East.
Polymarket traders assess a 91% chance that Iran will retaliate against Israel this month, while the perceived chance of US military action against Iran has increased from 4% to 28%. Stay vigilant!