By Nina Shah - Bitcoin reversed course on Wednesday, extending losses following a strong monthly advance in August as renewed U.S.-Iran military action and lingering uncertainty over interest rate direction weighed on risk-sensitive assets.
The world’s largest cryptocurrency fell 1.4% to $77,670.6 by 02:04 ET (06:04 GMT) after having rallied nearly 25% over August. That momentum has faltered in September as a resurgence in government bond yields and fresh Middle East hostilities tempered investor risk appetite.
Buying activity from Strategy, a major corporate holder, provided only limited support for bitcoin. The company recorded its first bitcoin purchase in two months, but the trade did not stop the pullback.
U.S.-Iran tensions and rising yields weigh
Overnight on Tuesday the U.S. and Iran traded another round of strikes amid ongoing disputes centered on the Strait of Hormuz. Both sides signalled little interest in de-escalation, with U.S. President Donald Trump threatening attacks on Iran’s oil infrastructure and Tehran warning of additional strikes on U.S. bases in neighbouring Gulf states.
The renewed hostilities represented the most intense U.S.-Iran clashes in more than a month and pushed oil prices sharply higher. That rise in energy costs fed concerns about increased energy-driven inflation globally, and government bond yields jumped in Japan, Australia, the U.S. and across Europe on those inflationary fears. The move higher in yields further pressured risk-driven assets, including cryptocurrencies.
Market participants were observed rapidly increasing bets that the Federal Reserve will raise interest rates in September as inflation remains well above the bank’s 2% annual target. Higher rates generally pose headwinds for assets viewed as speculative; bitcoin’s August advance had been driven largely by a prior drop in yields.
Attention this week is firmly on U.S. nonfarm payrolls data, due Friday, for clearer signals about the labour market and the Fed’s policy path. Any indication of a resilient jobs market could give the Federal Reserve scope to tighten further, which market participants see as negative for speculative positions.
Altcoins extend losses
Broader cryptocurrency markets also retreated on Wednesday after strong gains in August. Ether fell 2.1% to $2,419.3, while XRP declined 2.7% to $1.3461. Solana and Cardano were down 3.3% and 1.2%, respectively, and BNB slipped 0.3%. Among memecoins, Dogecoin dropped 1.9% and $TRUMP fell 4%.
The price moves reflect a wider pullback across risk assets amid rising yields and geopolitical uncertainty, with investors closely watching upcoming economic data for indications of the policy outlook.
Analyst perspective
From a market-structure standpoint, the combination of renewed geopolitical risk, higher energy prices and a reacceleration in bond yields is contributing to a more challenging environment for speculative assets. Near-term direction is likely to hinge on both further developments in the Gulf and the U.S. labour data due later in the week.