Home Markets The price of Bitcoin drops in August after climbing 22% in July. What’s going on?

The price of Bitcoin drops in August after climbing 22% in July. What’s going on?

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The price of Bitcoin drops in August after climbing 22% in July.  What’s going on?
A trendy young man works at his home workstation with two screens and a gaming chair, keeping an eye on his crypto investments.

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The Bitcoin (CRYPTO: BTC) the price has increased by 1% in the last 24 hours.

top of the world crypto is currently worth US$23,084 (AU$3,169).

Bitcoin started the month trading at US$23,289, meaning it is currently down a fraction in August after posting a 22% gain in July.

But the price of Bitcoin, as you probably know, tends to move fast. In fact, just hours after this article was written, Bitcoin price was in the green in August, trading at US$23,579, CoinMarketCap tell us.

Commenting on the recent rally, eToro market analyst and crypto expert Simon Peters said: “While there is still some way to go to recoup the first half losses, crypto-assets such as Bitcoin experiencing a mini revival.”

What influences the price of Bitcoin?

It wasn’t just Bitcoin price that rallied in July.

Most risky assets, like high-growth tech stocks, had a solid month, as evidenced by the 12% gain posted by NASDAQ and the 15% gain here in Australia on the S&P/ASX All-Tech Index (ASX:XTX).

“We see the synchronization with stock markets continuing,” Peters said. “July saw equities, particularly technology and other higher risk profile stocks, rebound. Much of the effects of inflation and rate hikes now seem priced in, with markets optimistic about recession worries.”

The growing impact of institutional investors

The greater presence of institutional investors in crypto markets appears to add to the correlation between Bitcoin price movements and other risky assets.

According to Peters:

Institutions have treated crypto holdings much the same as these stocks, which is why there is a greater correlation now than in the past. As these larger institutions return to the space, crypto investors could see valuations return to better levels.

So why has the price of Bitcoin pulled back over the past few hours?

Our best guess is that NASDAQ futures also turned moderately negative, indicating a likely retracement for risky assets when US markets open tomorrow (Australian time overnight).

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