Factors That Could Influence Bitcoin Values This Month
Cryptocurrencies are known for their volatility. Those buying them must be constantly aware of current and global affairs to gauge prospective drops and spikes in value. In this article, we discuss the most recent events that could impact Bitcoin values.
The world is constantly changing, and the value of Bitcoin is no different. From neutral positions to quick hikes in value, it seems every day brings a new dawn for Bitcoin. This makes it vital that investors stay attuned to current events that may impact the currency’s value. In this article, we discuss several current events that could change its price.
Interest Rate Cuts
The chair of the Federal Reserve announced in a late August speech that interest cuts were to happen. A surge in bitcoin was the result, that has valued it at $64,000 per coin after a low at the start of the month.
Like any investment, interest rates can have a direct impact on crypto and the bitcoin value. Generally, an increase in interest rates signals a decline in crypto prices. This results in a boost when rates are cut. When interest rates are low, you will find that riskier investment opportunities like crypto become more appealing to investors who lower their risk tolerance.
It is worth noting that these cuts have been announced but are yet to happen. A natural spike in crypto prices has already occurred and investors must now decide if they want to buy, or wait until after the cuts are official.
Russia’s Increased Use of Crypto Exchanges
Toncoin faced a huge crash in August and was a disaster for the Telegram-linked crypto coin. This has seen a renewed interest in more well-known coins, like Bitcoin. However, it has been reported that in response Russia is going to invest heavily in crypto exchanges within its country. This is to facilitate easier cross-border transactions, circumventing sanctions put in place by Western countries following the war in Ukraine.
The country has a National Payment Card system. Owned by the Central Bank of Russia, it is the main way of processing bank transactions in the country. According to Bloomberg, the system will start allowing the exchange of cryptocurrencies for roubles as early as September 1st.
Russian finance has been increasingly isolated since it declared war on Ukraine. It lost access to the Swift banking system in 2022. A further push was made in June of this year when the US began to isolate banks working with the country. This meant that even countries Russia previously thought it could rely on, such as China, began to halt payments in Yuan. As a result, Russia is having major problems paying for supplies from overseas and getting paid for exports. Cryptocurrency is one way it believes it can alleviate this problem.
Energy Shortages
The tech industry requires data centres to operate, and these require a lot of energy to run. As the world moves more towards cloud computing and artificial intelligence, the power demand is becoming ever greater. It is estimated that data centres could use up to 9% of the US electricity by the end of the decade.
This is having a direct impact on Bitcoin miners. Those who also need power are struggling to get it, as big tech companies begin to buy up the market. In response, many bitcoin miners who already have large infrastructure in place, such as land and energy, have started to change business tactics. They have now begun to lease out operations to tech giants, providing them with the energy they need. Some estimations state that around 20% of Bitcoin miners will have made the change to providing infrastructure to big tech by the end of 2027.
In either outcome, this means that fewer bitcoins are being mined. This increases scarcity, which should inevitably drive up prices. However, all of this depends on the future of US energy. Undoubtedly, in the short term prices are going to rise, not just impacting both industries but having a knock-on effect for consumers.
Major Crypto Withdrawals
Another factor to take into account is that there have been some high-profile withdrawals from the crypto market this month. While this can happen regularly, some of these have been extremely high. The reason for this is so far unknown.
Half a billion dollars worth of Bitcoin left the crypto exchange on Thursday 29th of August. The exact amount was 7,999 BTC, around $472.8 million. This was sent from one cold wallet to an address, then split to 50 others.
The Bottom Line
A range of factors, both domestic US and international, are shaping the value of bitcoin. All of these can make it unpredictable. However, to get the best from this investment it has always been one where you need to keep a close eye on current events and markets. The future of crypto and Bitcoin shows no signs of being any different.