Bitcoin Price Declines Amid Inflation Concerns

Bitcoin’s price drifted lower on Thursday as traders exercise caution ahead of an upcoming U.S. inflation reading, which is expected to influence interest rate outlooks.

Despite its status as the world’s leading cryptocurrency, Bitcoin is facing a significant decline in August due to a broader risk-off sentiment across financial markets, leading to particularly harsh impacts on crypto prices.

As of 08:46 ET (12:46 GMT), Bitcoin fell by 1.2% to $59,726.0, and is poised to lose nearly 9% this month.

August Challenges for Bitcoin

Bitcoin spent most of August in a downward trend, plagued by constant worries over token distributions and mass sales linked to the defunct Mt. Gox exchange. Moreover, dwindling capital inflows into the crypto space suggested that the initial excitement surrounding spot Bitcoin exchange-traded funds has significantly diminished, according to blockchain analytics firm Glassnode.

In recent months, retail interest in Bitcoin has also seen a decline.

Concerns of a U.S. recession prompted severe losses across global markets in early August, with cryptocurrencies also affected severely. While broader markets such as stocks have managed to recover from their losses, the crypto sector has continued to struggle.

Bitcoin established a trading range of $50,000 to $60,000 over the past month, having difficulty remaining above $60,000 for extended periods.

Cryptocurrency Market Overview

Broader cryptocurrency prices mirrored Bitcoin’s decline, with notable losses across the board for August. Ether, the world’s second-largest cryptocurrency, decreased by 1.6% to $2,529.75, marking a 22.2% loss this month—the worst drop since January 2022. Other altcoins such as XRP, SOL, and ADA saw declines ranging from 1.4% to 4%, while MATIC dropped 4.5%.

Markets are bracing themselves ahead of significant PCE price index data due later today, which serves as the Federal Reserve’s preferred inflation gauge and will likely influence its interest rate stance. Lower interest rates typically benefit cryptocurrencies by increasing liquidity for speculative trading.

Traders are factoring in a higher probability of a 25 basis point cut in September, according to CME Fedwatch.

Dogecoin Lawsuit Outcome

In meme token news, Dogecoin saw a slight 1% decline, showing little reaction after a lawsuit alleging Elon Musk and Tesla manipulated the token’s price was dismissed. Musk had previously promoted Dogecoin through social media and hinted at its acceptance for Tesla payments.

WazirX’s Legal and Financial Troubles

In other crypto news, troubled cryptocurrency exchange WazirX has set aside millions of dollars to cover legal expenses following a massive cyberattack in July that resulted in the theft of hundreds of millions in cryptocurrency.

Zettai Pte Ltd, WazirX’s parent company, submitted an affidavit to the High Court of Singapore seeking a 30-day moratorium aimed at stabilizing operations and facilitating discussions with investors and creditors. A moratorium could help avoid additional legal issues.

WazirX has halted withdrawals to address the aftermath of the attack, which left users in a precarious position and severely damaged trust in the exchange. Co-founder Nischal Shetty asserted that the exchange is committed to resolving these issues swiftly.

Additionally, rival exchange CoinSwitch has taken legal actions against WazirX due to inaccessible funds on its platform. Zettai stated that it is considering creditors’ interests in devising a plan for distributing users’ assets.

Currently, Zettai disclosed $284 million in liquid assets and $12 million set aside for ongoing investigations and legal processes.

Ambar Warrick contributed to this report.