Citi Lays Out The Biggest Risk On The Ukraine-Russia Border Right Now

Experts agree that the referendum will pass.

"This is independent from the question of whether the international community - or Ukraine - will accept the result," said Citi's Tina Fordham.

"The ballot question has two options: union with Russia or the "restoration of the 1992 Crimean Constitution," by which Crimea is independent of Ukraine in all but name, its relations with Kiev determined by treaty. (This is why some analysts have said the referendum "has no 'no' option.")"

Tensions are expected to escalate as the U.S. and E.U are expected to respond by imposing sanctions against Russia.

The concern for the everyone is how much more escalation there will be.

Fordham lays out what could potentially happen next:

The biggest risk to the current delicate situation would be Russian military intervention beyond Crimea, in Eastern or Southern Ukraine. Were this to occur, the Western allies would likely consider broader-based sanctions and a heightened state of NATO military readiness. In Kiev, the capacity of the Ukrainian military has prompted calls for a volunteer National Guard. The presence of far-right groups like the Right Sector, despite their limited popular support, has been cited by Moscow as evidence of "anti-Russian extremism". The pollster Levada Center has released a survey reporting that 67% of Russians believe radical Ukrainian nationalist groups are behind the current situation, underscoring the divergence of views between Russia and the West, which is supporting the new Ukrainian government.

Because it's unclear how much further things will escalate, strategists warn that the Ukraine crisis my not be fully priced into the markets.

"Although global markets have largely shrugged off geopolitical risks, we remain cautious," said Fordham. "Renewed ethnic clashes could be a catalyst for Russian military intervention beyond Crimea, while the revival of negotiations for an EU Association Agreement could also inflame Russian concerns. The situation remains highly fluid - and combustible - posing a significant challenge to security and diplomacy. Media reports of massing Russian troops could add to regional and market jitters. A key positive signpost would be a shift in stance from Moscow, which has thus far declined to negotiate with the new government in Kiev."