 ▲ Crude oil tanker |
Despite escalating geopolitical tensions in the Middle East, major cryptocurrencies such as Bitcoin and XRP (Ripple) have maintained an oddly calm trajectory. However, a prominent Wall Street CEO has issued a stark warning that this may merely be the calm before the storm.
According to investment-focused outlet FXLeaders on March 4 (local time), Goldman Sachs CEO David Solomon, speaking at a business conference in Sydney, Australia, pointed out what he described as a complacent response from digital asset investors to the conflict involving the United States, Israel, and Iran. He noted that while the global financial system is currently in a wait-and-see mode, the full economic repercussions of the conflict have yet to surface.
In fact, immediately after the outbreak of the Iran war on February 28, Bitcoin (BTC) plunged to $63,000 but rebounded to the $68,000 level within 48 hours as massive institutional buying poured in. Institutional investors engaged in bargain hunting for three consecutive days around the onset of the conflict, effectively serving as a buffer against a deeper price collapse. However, Solomon cautioned that if the dispute becomes prolonged and begins to directly impact consumer economies, the market’s risk assessment could be fundamentally repriced.
The biggest flashpoint is energy supply instability surrounding the Strait of Hormuz, through which roughly one-fifth of the world’s oil passes. Brent crude has surged as much as 14% since last Friday, climbing from $78 to around $82 per barrel. Rising oil prices act as a de facto tax on the global economy, fueling inflation and significantly reducing the likelihood of interest rate cuts by the U.S. Federal Reserve. This dynamic could ultimately dampen demand for risk assets such as cryptocurrencies, which do not generate interest income.
Experts say the cryptocurrency market is currently in a price-discovery phase driven less by fundamentals and more by headlines related to the Strait of Hormuz. They advise caution against aggressive investments, warning that if international oil prices continue to hover above $80, investors may seek refuge in safe-haven assets such as the U.S. dollar or gold, potentially leading to a gradual downturn in the crypto market.
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