Bitcoin hovered around US$77,000 on Thursday morning as higher bond yields, elevated oil prices and growing expectations of another US interest rate rise tested the cryptocurrency's strong August rally.
The world's largest cryptocurrency has retreated from above US$81,000 reached in late August and was trading around US$77,000 in the latest session, with buying momentum showing signs of cooling.
Bitcoin remains more than 20% higher over the past month but has lost ground over the past week as investors reassess the outlook for interest rates and broader financial conditions.
Rate expectations weigh on crypto
The biggest near-term pressure is coming from the bond market.
Expectations for another Federal Reserve rate increase have climbed following hawkish signals from Fed chair Kevin Warsh, with markets assigning roughly a two-thirds probability to a 25-basis-point increase this month.
That is a potential headwind for Bitcoin and other cryptocurrencies because higher interest rates increase the attractiveness of yield-bearing assets while tightening financial conditions.
Oil prices also remain elevated amid continuing US-Iran tensions, adding another inflationary risk for central banks. Brent crude settled at around US$95.63 per barrel on Wednesday, while the US 10-year Treasury yield remained near 4.8%.
Bitcoin has nevertheless shown some resilience compared with the initial sell-off, briefly recovering toward US$77,700 on Wednesday as some investors sought alternative assets amid geopolitical and financial-market uncertainty.
ETF flows cool after strong August
Institutional flows are providing a mixed picture.
US spot Bitcoin exchange-traded funds recorded US$236.5 million of net outflows on September 1, reversing some of the strong buying seen during August. Preliminary September 2 data indicated another modest net outflow.
That followed an exceptionally strong August in which US spot Bitcoin ETFs attracted about US$3.52 billion, their best month of 2026.
The reversal suggests investors may be taking some profits following Bitcoin's August rally rather than abandoning the asset altogether.
On-chain data is sending a similar message. Glassnode's accumulation measure indicates Bitcoin holders across different investor groups remain net buyers, although the pace of accumulation has slowed since the cryptocurrency approached US$81,000.
Ether and altcoins soften
Ether was also weaker, trading at about US$2,390 and down around 1% over 24 hours.
Institutional demand for Ether has remained comparatively resilient.
US spot Ethereum ETFs recorded around US$10.95 million of net inflows on September 1, extending their run of positive flows to 12 consecutive trading sessions. BlackRock's ETHB attracted US$11.2 million while Fidelity's FETH added US$4.81 million.
Elsewhere, Solana and XRP were both trading lower, while BNB bucked the broader trend with a modest gain.