Bitcoin fell on Monday, extending losses from the weekend, after Federal Reserve Chairman Kevin Warsh's hawkish comments pushed up expectations of higher interest rates.
Risk appetite in the markets has also declined due to renewed military operations between the United States and Iran, leading to a sharp rise in oil prices.
Bitcoin fell 0.3% to $78,007.10 by 9:23 AM. It hit a low of $77,396.00 earlier in the day.
However, Bitcoin was on track to make gains of nearly 24% during August, following a strong recovery in recent weeks.
Warsh's comments raise bets on an interest rate hike
During his speech at the Jackson Hole Economic Symposium on Friday, Warsh confirmed that the central bank remains committed to its annual inflation target of 2%.
Although he did not explicitly mention any plans to raise interest rates, his remarks were widely interpreted as hawkish, with markets increasing their bets on the possibility that the central bank will raise interest rates next September.
CME Fedwatch data indicates that traders are pricing in a 60.4% probability of the Federal Reserve raising interest rates by 25 basis points in September.
However, the non-farm payrolls data due later this week is expected to directly influence the central bank's direction on interest rates.
High interest rates are a negative factor for speculative assets such as Bitcoin and cryptocurrencies. The sector's surge in August was primarily fueled by a sharp decline in Treasury bond yields following intervention by the US Treasury Department in the bond market.
Military escalation between the United States and Iran casts a shadow
Cryptocurrency markets, along with other speculative assets, were affected by the renewed military operations between the United States and Iran. The two sides exchanged strikes on Sunday, the first such move in over a month.
Oil prices rose sharply in the wake of these developments, increasing concerns about rising inflation and interest rates.
Amid the uncertainty surrounding Iran, US President Donald Trump threatened to attack Kharg Island, a key hub for Iranian oil exports. Treasury Secretary Scott Bisnett also indicated plans to impose further economic sanctions on Tehran.
Cryptocurrency prices today: Altcoins decline but are heading towards a strong August
Cryptocurrency prices generally declined on Monday, but like Bitcoin, they were on track for a strong performance during August.
Ether, the world's second-largest cryptocurrency, fell 0.7% to $2,444.27, marking a gain of nearly 30% in August.
XRP fell by 2.7%, while it rose by 27.5% in August, while Solana and Cardano recorded gains of 40% and 15% respectively during the month.
BNB fell by 1.1%, and was on track to achieve a 16.6% gain in August.
In the meme cryptocurrency sector, Dogecoin and $TRUMP declined by 2.8% and 9.3%, respectively. Dogecoin had risen by 17.6% in August, while $TRUMP was on track for gains of nearly 67%.
