Bitcoin fell on Wednesday, extending losses after posting strong monthly gains in August, as renewed tensions between the United States and Iran and continued uncertainty over interest rates cast a shadow over the high-risk asset.
The world's largest cryptocurrency fell 1.4% to $77,670.60, after rising nearly 25% during August.
However, this rise stalled in September, as confidence in cryptocurrency markets declined due to renewed increases in Treasury bond yields, as well as the impact of renewed US-Iranian military operations on risk appetite.
The resumption of purchases by Strategy&, the largest institutional holder of Bitcoin, provided limited support for the currency, even as the firm recorded its first purchase in two months.
US-Iranian tensions and interest rate concerns halt Bitcoin's rise
The United States and Iran exchanged a new round of strikes on Tuesday night, amid the ongoing dispute between the two countries over the Strait of Hormuz.
Both sides showed limited willingness to ease tensions, with US President Donald Trump threatening to strike Iranian oil infrastructure, while Tehran warned of further attacks on US bases in neighboring Gulf states.
Oil prices rose sharply following the renewed clashes, which represented the most intense US-Iranian confrontation in more than a month.
The rise in oil prices, in turn, fueled fears of rising energy-driven inflation globally, pushing up government bond yields in Japan, Australia, the United States and Europe, and increasing pressure on high-risk assets.
Traders are rapidly increasing their bets on the Federal Reserve raising interest rates in September, especially with inflation remaining well above the bank's annual target of 2%.
The rise in interest rates casts a negative shadow on purely speculative assets, such as Bitcoin, while the currency's rise in August was largely driven by declining returns.
This week's focus is on the US non-farm payrolls data due on Friday, for further clues on the path of interest rates, as any signs of a robust labor market would give the Federal Reserve more room to raise rates.
Cryptocurrency prices today: Altcoins continue their losses after a strong August.
Cryptocurrency prices fell broadly on Wednesday, after also posting strong gains in August.
Ether, the world's second-largest cryptocurrency, fell 2.1% to $2,419.30, while XRP declined 2.7% to $1.35.
Solana and Cardano both fell by 3.3% and 1.2% respectively, while BNB declined by 0.3%.
As for the meme currency DogCoin and Trump, it fell by 1.9% and 4% respectively.
