Yesterday’s modest rally in stocks in response to a new war in the Middle East that broke out over the weekend (for now) appears to have been a lie.
At mid-morning in the United States, the Nasdaq is at session lows, with a drop of 2.5%. The S&P 500 is down 2.3%. European markets are being hit even harder, led by a 5.2% drop in Italy’s IBEX 35 and a 4.1% drop in Germany’s DAX.
Having reached record highs in the weeks before the war, precious metals are also falling. Gold fell 4.3%, silver 7.5% and platinum 11.3%. WTI crude oil continues to rise, another 8% to $77 per barrel.
However, after declining relentlessly over the past five months, cryptocurrency markets are showing a tiny bit of relative strength. Priced at $68,000, bitcoin is down 1% in the past 24 hours, but is up more than 2% from its worst levels of the day.
Also falling over the last day, but well above the worst levels of the session, were ether (ETH), solana (SOL), and XRP (XRP).
There is no such rebound yet in cryptocurrency-related stocks, which remain under heavy selling pressure on Tuesday.
Shares of trading platform Robinhood (HOOD) fell 7%, while Coinbase (COIN) fell 5%. Bullish Strategy (MSTR) and Crypto Platform (BLSH) each declined 4%. Stablecoin issuer Circle (CRCL) held up better, but still fell around 1%.
“Historically, bitcoin, as the only liquid asset that also trades on weekends, has absorbed shocks during periods of forced risk reduction,” said James Butterfill, head of research at CoinShares. “This time, the price development was constructive, bitcoin gained despite increasing instability… This divergence is significant. The absence of significant sell-offs despite rising yields and geopolitical tensions suggests that positioning has been adjusted compared to previous episodes.”
