Middle East "Nuclear War" Warning Lights Suddenly Activated! US Officials Confirm Two Major War Escalation Signals; Gold Breaks Through $2417, Bitcoin Plummets Amidst Turbulence

On Friday (April 19), the dollar surged to 106.32, gold broke through $2417, and Bitcoin plummeted below $61000. The US confirmed that Israeli aircraft are trapped in Iranian territory and explosions were heard in cities housing two significant Iranian nuclear program facilities, triggering immediate warnings of a "nuclear war" in the Middle East.

US officials confirmed that Israeli aircraft are stuck inside Iran.

According to reports, explosions occurred near the cities of Isfahan and Natanz in central Iran in the last few minutes, both of which host critical facilities for Iran's nuclear program.

Isfahan is a large city with a population of 2.2 million.

Arab Sky News, citing local media, reported three major explosions in Isfahan.

In addition to Isfahan, explosions were heard in the southern Syrian city of As-Suwayda and the Baghdad region, as well as in Babil, Iraq.

Syrian reports indicated that the airstrikes targeted locations of the Syrian army in the southern provinces of Suwayda and Daraa.

According to ABC, citing a senior US official, Israeli missiles struck a location in Iran.

Iran's military warned that if Israel attacks Iran's nuclear facilities, they will strike Israeli nuclear sites and may seek nuclear weapons.

The semi-official Iranian news website Tasnim quoted IRGC Brigadier General Ahmad Haghtalab: "The nuclear facilities of the Zionist enemy have been identified, and all necessary information from all targets is available to us."

Amidst these developments, Bitcoin quickly fell, breaking below the $61000 threshold.

Bitcoin funding rates turned negative on April 15 and 18, reaching a six-month low, indicating a decrease in interest in long positions. This market sentiment shift often becomes apparent after significant price fluctuations, as evidenced by a 13.5% drop in Bitcoin prices from April 12 to April 18.

Source: Laevitas

Market dynamics typically indicate that when bearish confidence strengthens, the impact is most pronounced. For example, some analysts interpreted a double top pattern at $72000 as a signal that the downward trend could persist until June.

From a broader economic perspective, recent US data showed stronger-than-expected inflation and robust retail sales, reducing investors' risk aversion. The Consumer Price Index in March rose 3.8% year-over-year, significantly above the Federal Reserve's 2% target, and retail sales increased by 0.7% year-over-year.

A thriving economy reduces the likelihood of the Federal Reserve cutting interest rates, which tends to benefit fixed income investments. As Reuters pointed out, despite concerns about financial pressure on low-income families, a strong labor market has supported consumer spending.

This has bolstered the dollar but has put pressure on the US stock market and the cryptocurrency market.

Warnings of a downturn in risk assets are sounding, and following a retreat from last month's historical highs, US stock market sentiment has fallen to a low point. Now, with escalating tensions in the Middle East, the US stock market is likely to follow cryptocurrencies in a downturn.

Evercore ISI's quantitative strategist, Julian Emanuel, predicts that US stocks will continue to decline in 2024.

Julian further predicted that the S&P 500 index's target price by the end of 2024 is 4750 points, indicating that the S&P 500 could fall an additional 6% this year.

Source: Bloomberg

He also noted that stalled progress on combating inflation, uncertainty about when the Fed might cut rates, and the upcoming US presidential election in the second half of the year are adding pressure to the stock market.

He added that the current monetary policy resembles a question mark, which will be a catalyst for further declines in the stock market. He also expects a highly topical election to shift consumer attention from spending to voting decisions.

The US stock market has fallen for the fourth consecutive trading day on Wednesday, the first such occurrence since early January. Limited upward potential in the stock market, along with hawkish signals from the Fed and the latest Iranian attack event, has significantly lowered market investment sentiment.