The United States and Iran have sparked geopolitical tensions that have shaken global markets, as threats of retaliation between the two countries have created great uncertainty for oil prices, stocks and even crypto.
It began when US President Donald Trump issued a stern warning that the United States would destroy Iranian power plants if the country did not open the Strait of Hormuz within 48 hours.
The threat was immediately met by Iran with a promise of a more aggressive response, including the possibility of closing the strategic strait, a vital route for world oil trade.
The effects of this conflict can be seen almost immediately.
Oil prices have risen and fallen sharply in a short period of time, reflecting market volatility.
Brent crude oil, the world's main oil benchmark, surged above $114 a barrel before falling again.
At the same time, Asian stock markets were also affected.
Japan recorded a drop of more than 4%, while Australia and New Zealand each fell around 0.8%.
Interestingly, Bitcoin, which is often considered a ‘safe haven’ asset like gold, is not exempt from the pressure.
Its value fell by around 1.8%, and even managed to drop lower before recovering slightly.
More worryingly, investor sentiment is at a very low level, with the market fear index showing ‘extreme fear’.
The rise in oil prices also brings another major impact, which is increasing inflation expectations.
When inflation is expected to increase, central banks such as the Federal Reserve are likely to raise interest rates. This move usually puts pressure on riskier assets such as stocks and crypto as borrowing costs become more expensive.
However, Bitcoin continues to receive support from institutional investors, with strong inflows of funds into crypto ETFs.
