Ed Yardeni, a prominent Wall Street expert, has warned that escalating geopolitical tensions could trigger a sharp decline in the financial markets, including crypto-linked equities. He recently raised the probability of a major decline in US equities and crypto markets to 35% for the remainder of the year, up from his earlier estimate of 20%.
The warning comes as conflict between the United States and Iran intensifies, increasing uncertainty across global markets.
Oil Price Surge Raises Market Risks
According to Yardeni, the growing war risks and rising energy prices could weigh heavily on investor sentiment. Oil prices have already surged above $100 per barrel, fueling fears that prolonged conflict in the Middle East could push energy costs even higher and pressure both traditional markets and crypto-linked stocks.
Yardeni also reduced the likelihood of a strong market rally driven by investor optimism to just 5%, down from 20% previously. He warned that the U.S. economy and financial markets are currently facing pressure from multiple directions, including geopolitical instability, inflation risks, and slowing economic growth.
Expectations for interest rate cuts by the Federal Reserve have also shifted. While traders had previously anticipated a rate cut as early as July, many now expect the first move to come in September, with some analysts suggesting there may be no cuts at all this year. Meanwhile, leadership changes in Iran have added further uncertainty. Mojtaba Khamenei has reportedly taken over as the country’s supreme leader following the death of Ali Khamenei.
During these uncertain times, crypto-related firms such as Core Scientific have begun adjusting strategies, highlighting the broader market volatility triggered by the conflict.
