31.08.2026 17:40
Bitcoin rose along with gold throughout August. The rise of the two assets coincided with a period of seeking protection against the depreciation of currencies. Both assets declined following the strengthened expectations of an interest rate hike after US Federal Reserve Chairman Kevin Warsh's speech at Jackson Hole on Friday.
During the period when Bitcoin moved in tandem with gold, both assets rose. As the Fed shifted to a more hawkish stance, that same relationship turned into a shared risk channel.
One of the starting points of the rally was a development in the bond market. The US Treasury announced it would raise the buyback cap for long-term bonds from $2 billion to at least $4 billion per operation. Following the announcement, investors turned from fiat currencies to alternative assets.
The move was reflected in fund flows and mining stocks. The MSCI Global Gold Miners Index gained 43 percent in August, marking its strongest month on record. Meanwhile, a total of $7 billion flowed into gold and Bitcoin ETFs over five trading days.
Both assets reached their recent peaks last week. Gold hit $4,697 per ounce on Tuesday, while Bitcoin climbed to $81,354.
Both assets then retreated from their peaks. Gold fell to $4,432 on Monday, declining 5.6 percent from Tuesday's peak, while Bitcoin dropped about 5 percent from its weekly high to the $77,000 range.
PROBABILITY OF RATE HIKE RISES TO 62.6 PERCENT
Warsh sharpened the inflation message in his first Jackson Hole speech. The Chairman said, "Inflation is running above our 2 percent target, so the Fed's primary focus right now should be prices."
According to CME's FedWatch tool, the probability of the Fed raising its rate target to the 3.75 percent to 4.00 percent range on September 16 has risen to 62.6 percent.
The probability stood at 57 percent a day earlier and 39.9 percent a week earlier.
The rate hike expectation exerted pressure on both assets through the same channel. A higher policy rate increases the opportunity cost of holding assets that generate no yield. Gold and Bitcoin fall into this group.
BITCOIN'S LINK TO GOLD WORKS BOTH WAYS
The recent decline did not break the pattern of co-movement. The two assets falling together shows they are responding to the same macro factor.
Grayscale had flagged this shift days before the sell-off. Research Head Zach Pandl argued that investors now view Bitcoin as a monetary hedge rather than a leveraged bet on tech stocks.
This approach works both ways. Assets priced as monetary hedges rise when concerns about currency depreciation strengthen. When the Fed turns hawkish, they can face selling pressure independently of tech stocks.
Part of the decline could also be ordinary profit-taking. Both assets are still trading well above the levels where they started the month.
Attention now turns to the Fed meeting on September 16. If the Fed delivers the rate hike priced by the market, the trade built against currency depreciation will face its first serious test since bond selling began.
At the time of publication, Bitcoin was trading at $77,816. The cryptocurrency remained about $3,500 below its weekly peak of $81,354.