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# US-Iran Conflict Escalates Again
The U.S. reneges on its commitments, how will the escalating conflict impact the financial markets?

On the early morning of May 8th, U.S. forces violated the ceasefire agreement and launched airstrikes against Iranian coastal areas and oil tankers. Iran's armed forces immediately retaliated, using ballistic missiles, anti-ship cruise missiles, and drones to strike U.S. naval vessels east of the Strait of Hormuz. The Iranian Revolutionary Guard claimed to have repelled three U.S. destroyers and caused "significant damage." Once again, the US and Iran are at war—what is the potential impact on financial markets? Let Little Wealthy tell you.

Bitcoin may face short-term pressure but could rebound; gold faces rate suppression but still retains its long-term safe-haven properties. The U.S. maintaining a "ceasefire agreement" in name while conducting targeted strikes on Iran indicates that geopolitical tensions have entered a "low-intensity, high-sustainability" phase, which will have structural effects on financial markets.

Impact on Bitcoin

Short-term volatility intensifies: The escalation of geopolitical conflict triggers risk-averse sentiment in the markets. Investors tend to sell off high-risk assets for liquidity in the short term. As a risk asset highly correlated with tech stocks, Bitcoin often faces selling pressure initially.

Strengthening of long- and medium-term safe-haven narratives: If the conflict persists, some funds will view Bitcoin as "digital gold" for allocation, especially in regions where traditional financial channels are restricted or fiat currency confidence is damaged. Its decentralized, cross-border transfer features highlight its value.

Liquidity environment constraints: Currently, the Federal Reserve maintains high interest rates due to soaring energy inflation, leading to tight market liquidity and suppressing Bitcoin's upward momentum. However, if geopolitical risks become prolonged and inflation remains high, it could instead drive funds toward inflation-hedging assets, benefiting Bitcoin's medium- and long-term performance.

Impact on Gold

Traditional safe-haven logic is hindered: Although geopolitical conflict should boost gold, rising oil prices increase inflation expectations, prompting the Fed to delay rate cuts. Actual interest rates rise, suppressing the performance of non-yielding assets like gold.

Dollar strength drains liquidity: During market panic, the dollar, as the world's primary safe-haven currency, becomes more favored. Funds flow from gold into the dollar, creating a "strong dollar, weak gold" pattern.

Long-term support remains: If the U.S. becomes embroiled in a prolonged military conflict, the dollar's credibility could suffer. Gold, as the ultimate store of value, will regain importance, and the fourth major upward wave may begin.
BTC-1.63%
PAXG0.55%
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