Why Is Bitcoin Down? Here’s What To Know.


Topline

Hotter-than-expected inflation data and cooled government interest in bitcoin appeared to rein in the world’s largest cryptocurrency Thursday, after bitcoin’s value peaked at yet another all-time high hours earlier.

Key Facts

Bitcoin declined by more than 4% to just over $117,700 as of around 2:25 p.m. EDT on Thursday, pacing what would be the crypto’s largest daily decrease since April 6 (6.1%).

The price of bitcoin jumped to a new all-time high of $124,436 earlier Thursday, following a 2.6% rally Wednesday, before the value dropped sharply from its peak.

A report by the Bureau of Labor Statistics indicated wholesale prices increased 0.9% in July, well above economists’ forecasts of 0.2%, according to FactSet, marking a reversal in demand for risk assets like bitcoin as optimism the Federal Reserve will cut interest rates in September appeared to drop slightly.

Treasury Secretary Scott Bessent told Fox Business on Thursday the U.S. did not plan to acquire more crypto assets for its bitcoin reserve, adding, “We’re not going to be buying that, but we are going to use confiscated assets and continue to build that up.”

The U.S. bitcoin reserve holds between $15 billion and $20 billion in assets, Bessent said.

What To Watch For

Ether, the second-largest cryptocurrency by market capitalization, earlier Thursday neared its all-time high set in November 2021 before paring back gains. Analysts appear optimistic about ether’s growth prospects this year: Standard Chartered analyst Geoff Kendrick increased his year-end price target for ether from $4,000 to $7,500 and suggested the cryptocurrency could surge to $25,000 by 2028. Kendrick said ether has benefited from recent regulatory developments, specifically the GENIUS Act, which provided the first federal regulations for stablecoins. Stablecoins rely heavily on Ethereum’s blockchain, accounting for about 20% of all blockchain fees.

Key Background

The broader cryptocurrency market has rallied so far this year amid regulatory optimism under the Trump administration. Bitcoin has soared to new record highs, including surpassing the $110,000 and $120,000 thresholds within a two-month period. President Donald Trump has signaled he would ease regulatory burdens facing the crypto industry, and announced the U.S. would establish a digital asset stockpile similar to its gold reserve. Several companies have said they would similarly invest in bitcoin, including Trump’s Trump Media and Technology Group, which announced a $2.5 billion plan to set up a corporate bitcoin reserve.

Further Reading

ForbesStocks Shudder As Wholesale Prices Rise Higher Than Expected In July



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