The Bitcoin price tanked 15% in August. Here’s why

The Bitcoin (CRYPTO: BTC) price has broken back through the psychologically important US$20,000 mark, currently trading for US$20,226 (AU$29,801).

That’s a healthy rebound from the lows of US$19,654 the world’s top crypto was trading for just a few hours ago. Though Bitcoin remains down 58% year-to-date.

It’s also a fair bit lower than where it kicked off August after the Bitcoin price gained 22% in July.

Here’s what happened in the month just past.

Bitcoin price hit by renewed risk-off sentiment

Depending somewhat on your time zone, as crypto valuations can move quickly, the Bitcoin price kicked off August trading for US$23,715.

By the end of the month, the token was worth US$20,209, down 14.8%.

Though less volatile than many months, August still saw some big price swings, with Bitcoin trading as high as US$25,135 and as low as US$19,600, according to data from CoinMarketCap.

The biggest headwind facing the token was increased hawkishness from the US Federal Reserve and other leading global central banks.

With inflation in most developed nations running at multi-decade highs and not looking to fall back within guideline ranges soon, investors sold off most risk assets in August as they braced for further interest rate hikes.

The tech-heavy NASDAQ, a solid proxy for risk appetite, fell 4.6% last month.

And the Bitcoin price, as we’ve seen through most of 2022, not only mirrored that fall but amplified it. The same way the token tends to amplify gains made by the NASDAQ.

Explaining the strengthening connection between the Bitcoin price and stocks this year, eToro’s market analyst and crypto expert Simon Peters said, “Institutions have treated crypto holdings in much the same way as these equities, which is why there’s greater correlation now than in the past.”

At the current price, Bitcoin has a market cap of US$387 billion.

The post The Bitcoin price tanked 15% in August. Here’s why appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Why the Bitcoin price was struggling today
• Bitcoin price resilience ‘could be a promising sign’: expert
• Can the Bitcoin price reach $100,000?
• Why Bitcoin, Ethereum, and Dogecoin are falling today
• 1 cryptocurrency to buy and hold forever

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Bitcoin. The Motley Fool Australia has positions in and has recommended Bitcoin. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/32vw4cm