Bitcoin price dips in August after soaring 22% in July. What's going on?

The greater presence of institutional investors in crypto markets looks to be adding to the correlation between cryptos and other risk assets.

| More on:
A hip young guy works at his home workstation with two screens and a gamers chair, keeping an eye on his crypto investments.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • The Bitcoin price is up 1% today
  • Cryptos continue to move closely in line with other risk assets this year
  • Bitcoin has enjoyed a strong run with much of the impact of interest rate rises appearing to be priced into the markets

The Bitcoin (CRYPTO: BTC) price is up 1% over the past 24 hours.

The world's top crypto is currently worth US$23,084 (AU$3,169).

Bitcoin kicked off the month trading for US$23,289, meaning it's currently down a fraction in August after posting a gain of 22% in July.

But the Bitcoin price, as you're likely aware, tends to move quickly. In fact, just a few hours from the time of writing, the Bitcoin price was in the green for August, trading at US$23,579, CoinMarketCap tells us.

Commenting on the recent rally, eToro's market analyst and crypto expert Simon Peters said, "While still a way to go to recover losses of H1, cryptoassets such as Bitcoin are witnessing a mini revival."

What's influencing the Bitcoin price?

It's not just the Bitcoin price that rallied in July.

Most risk assets, like high-growth tech shares, enjoyed a strong month, as witnessed by the 12% gain posted by the NASDAQ and the 15% gain here in Australia on the S&P/ASX All Technology Index (ASX: XTX).

"We're very much seeing that the syncing up with equity markets is continuing," Peters said. "July saw stocks, particularly tech and other higher-risk-profile equities surge back. Much of the effects of inflation and rate hikes now appears priced in, with markets sanguine about recession worries."

The rising impact of institutional investors

The greater presence of institutional investors in crypto markets looks to be adding to the correlation between the Bitcoin price moves and other risk assets.

According to Peters:

Institutions have treated crypto holdings in much the same way as these equities, which is why there's greater correlation now than in the past. As those big institutions move back into the space the crypto investors could see valuations tick back to better levels.

So, why has the Bitcoin price been retracing over the past few hours?

Our best guess is that futures on the NASDAQ have also turned moderately negative, indicating a likely retrace for risk assets when US markets open tomorrow (overnight Aussie time).

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Bitcoin. The Motley Fool Australia has positions in and has recommended Bitcoin. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

A happy young couple lie on a wooden deck using a skateboard for a pillow.
Share Gainers

These were the best-performing ASX 200 shares in March

These shares made their shareholders smile in March thanks to some very big gains.

Read more »

Businessman using a digital tablet with a graphical chart, symbolising the stock market.
Opinions

2 ASX shares I have been buying in 2024!

I’m a believer in the long-term outlook of these stocks.

Read more »

Stock market chart in green with a rising arrow symbolising a rising share price.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a massive day for the ASX 200, with a new all-time high recorded.

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Technology Shares

This ASX tech stock rocketed 60% in March! Can it keep on delivering?

After soaring in March, the ASX tech stock is now up 169% since this time last year.

Read more »

Broker Notes

Brokers name 3 ASX shares to buy now

Here's why brokers are feeling bullish about these three shares this week.

Read more »

A young man clasps his hand to his head with his eyes closed and a pained expression on his face as he clasps a laptop computer in front of him, seemingly learning of bad news or a poor investment.
Share Fallers

Why Burgundy Diamond Mines, Clarity Pharmaceuticals, EML, and Zip are sinking today

These ASX shares are ending the week in the red. But why?

Read more »

A young women pumps her fists in excitement after seeing some good news on her laptop.
Share Gainers

Why Mesoblast, Newmont, Pilbara Minerals, and Platinum shares are jumping

These ASX shares are ending the week strongly. But why?

Read more »

a young boy dressed up in a business suit and tie has a cute grin and holds two fingers up.
Opinions

2 of my top ASX 200 shares to consider buying before April

I would happily exchange dollars for these two shares right now.

Read more »