Bitcoin moved lower on Monday, extending its weekend decline as investors reacted to hawkish comments from Federal Reserve Chair Kevin Warsh and renewed tensions between the United States and Iran.
The broader crypto market also came under pressure as rising oil prices revived concerns about inflation and the possibility of higher U.S. interest rates.
Bitcoin Falls Toward $78,000
Bitcoin slipped 0.3% to around $78,007 by 02:23 ET, after touching an intraday low near $77,396.
Despite the latest pullback, the world’s largest cryptocurrency remained on track for a strong monthly performance.
Bitcoin was set to gain nearly 24% in August, supported by a powerful rebound over recent weeks.
Warsh Comments Lift Fed Rate Hike Expectations
Federal Reserve Chair Kevin Warsh delivered a closely watched speech at the Jackson Hole economic symposium on Friday.
Warsh reiterated the Fed’s commitment to bringing inflation back toward its 2% annual target.
Although he did not directly announce plans to raise interest rates, investors interpreted his comments as more hawkish than expected.
Markets subsequently increased expectations that the Federal Reserve could raise rates as early as September.
September Rate Hike Odds Climb
Traders were pricing in a roughly 60.4% probability that the Fed would raise interest rates by 25 basis points at its September meeting, according to CME FedWatch.
Attention is now shifting toward upcoming U.S. employment data.
The latest nonfarm payrolls report, due later this week, could provide additional clues about the Federal Reserve’s next policy move.
Stronger-than-expected labor market data could reinforce expectations for higher rates, while weaker figures may reduce pressure on policymakers to tighten further.
Higher Rates Remain a Risk for Bitcoin
Higher interest rates are generally considered a headwind for speculative assets such as Bitcoin and other cryptocurrencies.
When borrowing costs rise and Treasury yields become more attractive, investors may become less willing to hold higher-risk assets.
Bitcoin’s August rally was helped in part by a significant decline in Treasury yields following intervention in the bond market by the U.S. Treasury.
A renewed rise in yields could therefore create additional pressure on crypto prices.
U.S.-Iran Escalation Weighs on Risk Appetite
Geopolitical uncertainty added another layer of pressure to financial markets.
The United States and Iran exchanged military strikes on Sunday, marking their first major confrontation in more than a month.
The escalation unsettled risk-sensitive assets, including cryptocurrencies.
Oil prices also climbed sharply following the renewed fighting, increasing concerns that higher energy costs could fuel additional inflation.
Kharg Island and Iran Sanctions Add Uncertainty
Concerns over Iran intensified after U.S. President Donald Trump threatened further action involving Kharg Island, one of Iran’s most important oil-exporting hubs.
U.S. Treasury Secretary Scott Bessent also indicated that Washington was preparing additional economic sanctions against Tehran.
Any prolonged escalation affecting Iranian energy infrastructure or the Strait of Hormuz could push oil prices higher and increase inflationary pressure globally.
That could, in turn, influence Federal Reserve policy and weigh further on crypto market sentiment.
Ethereum and Altcoins Move Lower
The broader cryptocurrency market also traded mostly lower on Monday.
Ethereum fell around 0.7% to $2,444.27, although it remained on track for a monthly gain of nearly 30%.
XRP declined 2.7%, but was still up approximately 27.5% in August.
Solana and Cardano performed even more strongly over the month, with gains of roughly 40% and 15%, respectively.
BNB, Dogecoin and TRUMP Also Fall
BNB slipped around 1.1% on Monday but remained on course for an August gain of approximately 16.6%.
Among major memecoins, Dogecoin fell 2.8%, while TRUMP dropped around 9.3%.
Even so, both tokens remained sharply higher for the month.
Dogecoin was up roughly 17.6% in August, while TRUMP was heading for a gain of nearly 67%.
Bitcoin Still Heads for Strong August
Despite Monday’s weakness, Bitcoin and much of the broader crypto market remained on track for substantial monthly gains.
The immediate outlook will likely depend on three major factors: upcoming U.S. employment data, expectations for Federal Reserve interest rates and developments in the U.S.-Iran conflict.
If rate hike expectations continue to rise or geopolitical tensions intensify, Bitcoin could face further short-term volatility.
However, the strong August performance shows that demand for cryptocurrencies has remained resilient despite growing macroeconomic and geopolitical risks.
