- Solomon warns Middle East tensions could pressure crypto for weeks as volatility builds gradually.
- Rising oil and a stronger dollar could pressure Bitcoin and other risk assets if inflation rises.
- Matt Hougan says the Israel-Iran conflict proved crypto’s edge as a 24/7 global market.
Rising tensions in the Middle East could pressure cryptocurrencies for several weeks, according to David Solomon, CEO of Goldman Sachs.
Speaking at a business summit in Sydney, Solomon said he was surprised that financial markets reacted calmly after the conflict involving Israel and Iran began. Normally, big geopolitical events can cause sharp market sell-offs, but that hasn’t happened this time.
He explained that markets often don’t move dramatically unless a conflict clearly threatens economic growth.
However, Solomon warned that it could take “a couple of weeks” for investors to fully understand the short- and mid-term impact of the situation. This means market volatility, including in cryptocurrencies, could increase gradually rather than all at once.
Oil Spikes, Risk Assets Under Pressure
The widening conflict has already pushed oil prices higher on supply concerns, adding to fears that inflation could reaccelerate. At the same time, global equities have slipped, and the U.S. dollar has strengthened as investors rotated away from riskier assets toward traditional safe havens.
However, losses on Wall Street have remained relatively mild. The S&P 500 is down less than 1% this week after trimming earlier declines.
For crypto markets, which often trade as high-beta risk assets, a delayed but cumulative reaction in equities could translate into a short-term downtrend. Digital assets also tend to struggle when the dollar gets stronger and inflation expectations rise, especially if financial conditions tighten.
Strong U.S. Macro Backdrop Offers Cushion
Solomon emphasized that aside from the Middle East tensions, the U.S. economy remains strong. He pointed to supportive factors like easier monetary policy and lighter regulation, and said growth this year could even “run a little bit hot.”
However, stronger growth and higher oil prices could push inflation higher, making it harder for the Federal Reserve to manage interest rates. That could affect assets like Bitcoin and other cryptocurrencies, which are sensitive to changes in liquidity.
Solomon also warned that lending standards may have weakened during the long credit cycle. If growth slows or a recession begins, those risks could become more visible.
AI Disruption and Productivity Shift
Beyond geopolitics and macro conditions, Solomon also discussed how artificial intelligence is changing banking. Goldman Sachs recently partnered with AI company Anthropic to create AI tools that automate tasks like client onboarding.
Solomon said the short-term effect on office jobs is “complicated,” but overall staff levels may not change much. Instead, AI could boost productivity and let employees focus on other work.
Crypto Shines as 24/7 Market
Meanwhile, geopolitical events are accelerating mainstream attention to blockchain. Matt Hougan, CIO of Bitwise, noted in a March 3 blog post that the Israel-Iran conflict exposed a weakness in traditional markets: they close. Crypto markets, by contrast, trade 24/7.
Hougan recalled that U.S. attacks on Iran occurred early Sunday, February 28, when most global markets were offline.
Meanwhile, crypto platforms like Hyperliquid, tokenized gold XAUT, and prediction markets saw record trading volumes. For Hougan, this marked a turning point, showing that crypto wasn’t just an alternative; it became the market.
He predicts institutional adoption will accelerate as investors set up stablecoin wallets and explore decentralized finance (DeFi) platforms. Blockchain tokenization of assets like stocks, oil, and gold could make trading faster, cheaper, and more transparent, though risks like volatility, cybersecurity threats, and weaker regulatory protections remain.
Related: Bitcoin Shows Resilience as Middle East Tensions Rise
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