Bitcoin has doubled its value and soared to mind-boggling highs over the last year, but the king of cryptocurrency stumbled a bit in late August.
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The digital coin dipped to a 30-day low of around $108,000 on Friday, down from a record high of $124,457 mid-month. A few factors are likely at work in the dip.
Cryptocurrency traders have observed activity this week from a Bitcoin “whale” — someone holding a huge position in a given coin — that on its own might be enough to move markets. When a whale moves their assets around, the size of the trade can send a coin up or down and spook onlookers, who might be inclined to follow suit.
Earlier this week, one whale sold 24,000 Bitcoin worth $2.7 billion in a single day. Another trader with a massive position in Bitcoin was just spotted buying up Ethereum, the cryptocurrency with the second-highest market capitalization. When large positions flow out from Bitcoin and into Ethereum, it can send the former down and the latter up — particularly if the broader crypto market chases the big movers.
Beyond big trades and whale moves, cryptocurrency is affected by broader macroeconomic factors just like everything else. President Trump’s reelection sent Bitcoin on a tear late last year, but high interest rates still temper interest in digital coins. If the Federal Reserve lowers interest rates and borrowing cash gets cheaper, money is likely to flow into riskier investments like Bitcoin.
In a highly anticipated speech late last week, Fed Chair Jerome Powell signaled that rate cuts could be on the way next month. Powell pointed to slowing economic growth in the first half of the year, but remains cautious over the effects of Trump’s tariffs on the Fed’s quest to quell inflation. All of these factors influence traditional stocks and their chaotic counterpart, the cryptocurrency market.
If Bitcoin’s late-summer slump seems foreboding, a glance at a price chart on a longer timeline should dispel any concerns: A year ago, BTC was trading for less than $60,000.
