Bitcoin slipped below the $80,000 level on Monday as stronger-than-expected U.S. employment data increased expectations for a Federal Reserve interest-rate hike.
At the same time, rising oil prices and escalating tensions between the United States and Iran added further pressure to Bitcoin and other risk assets.
Bitcoin was trading near $79,725, down around 0.3% on the day.
Bitcoin Retreats From Three-Month High
Bitcoin had briefly climbed above $82,000 last week.
The cryptocurrency reached approximately $82,179 on Thursday, marking its highest level in more than three months.
However, the rally lost momentum after Friday’s U.S. employment report strengthened expectations that the Federal Reserve could keep monetary policy tighter for longer.
Strong U.S. Jobs Data Boosts Fed Rate Hike Bets
The latest employment report showed that U.S. employers added 162,000 jobs in August.
That was nearly three times higher than economists had expected.
Meanwhile, the unemployment rate remained unchanged at 4.1%.
Following the report, markets increased the probability of a Federal Reserve rate hike at the September 15-16 meeting to around 60%, compared with roughly 49% before the data.
Higher Interest Rates Pressure Bitcoin
Expectations for higher interest rates can create difficulties for Bitcoin and other speculative assets.
When rates rise, yield-bearing investments such as government bonds become more attractive to investors.
Higher borrowing costs can also tighten financial conditions and reduce demand for riskier assets, including cryptocurrencies.
As a result, changing Federal Reserve expectations remain an important driver for the Bitcoin price outlook.
Oil Prices Add Pressure to Risk Assets
Higher oil prices have created another source of uncertainty for global markets.
Brent crude climbed to around $97 per barrel on Monday as tensions between the United States and Iran raised fears of potential energy supply disruptions in the Middle East.
The latest escalation has increased concerns about oil shipments and regional stability.
Rising energy prices can also contribute to inflationary pressure, potentially making it more difficult for the Federal Reserve to ease monetary policy.
Investors Turn to U.S. Inflation Data
Markets are now focused on upcoming U.S. inflation reports for additional clues about the Fed’s next move.
Producer-price inflation data is due on Thursday, followed by consumer-price inflation on Friday.
A stronger-than-expected inflation reading could reinforce expectations for higher interest rates.
That scenario could create additional volatility for Bitcoin, equities and other risk-sensitive markets.
Bitcoin ETF Inflows Provide Support
Despite the recent Bitcoin price decline, institutional demand continues to provide some support.
U.S. spot Bitcoin exchange-traded funds recorded approximately $1 billion in net inflows last week, according to SoSoValue data.
The continued ETF demand suggests that institutional interest remains relatively strong even as macroeconomic uncertainty weighs on Bitcoin’s short-term performance.
Liquid Network Hit by $320 Million Security Exploit
Bitcoin markets also faced concerns surrounding a major security incident involving the Bitcoin-linked Liquid Network.
The settlement network halted new transactions after approximately $320 million worth of Bitcoin was withdrawn from one of its federation wallets during a security exploit.
Around 4,000 of the roughly 4,200 BTC stored in the wallet were reportedly removed.
The transactions were conducted through SideSwap, a settlement platform authorized to facilitate activity on the network.
Exchanges Suspend Liquid Bitcoin Transactions
The individuals responsible reportedly described themselves as white-hat hackers.
However, their identities and intentions remained unclear.
Several cryptocurrency exchanges suspended deposits and withdrawals involving LBTC, Liquid Network’s Bitcoin-linked token, while the incident was investigated.
The security event added another layer of uncertainty to an already cautious cryptocurrency market.
Ethereum, XRP and Altcoins Move Lower
Most major altcoins also traded lower on Monday.
Ethereum fell around 0.4% to $2,502, while XRP declined approximately 1.1% to $1.41.
Solana dropped about 1.1%, Cardano declined 0.9%, and BNB fell roughly 2%.
Among major meme cryptocurrencies, Dogecoin slipped around 1.8%.
With Federal Reserve expectations, oil prices and geopolitical risks all influencing sentiment, Bitcoin traders are likely to remain focused on incoming U.S. inflation data and the cryptocurrency’s ability to reclaim the $80,000 level.
