Bitcoin fell on Friday, extending the sharp declines recorded earlier this week, as risk appetite weakened amid growing doubts about a US rate cut ahead of the highly anticipated speech by Federal Reserve Chair Jerome Powell.
The world’s largest cryptocurrency posted weekly losses of nearly 4%, weighed down by a wave of profit-taking after hitting record levels in early August. Other digital currencies also retreated broadly on Friday, heading for weekly losses as well.
Markets did not react to a report stating that China is considering developing yuan-backed stablecoins to promote domestic currency trading, despite Beijing having banned all crypto trading activities in 2021.
Bitcoin dropped by 0.9% to $112,200 as of 12:43 GMT on CoinMarketCap.
Bitcoin Declines Amid Weakening Rate-Cut Bets and Powell Anticipation
The latest Bitcoin losses came against the backdrop of a broader deterioration in risk sentiment, as markets gradually reduced expectations for a September rate cut.
Federal funds futures pricing showed that markets currently assign a 73.1% chance of a 25-basis-point cut in September, down from more than 90% last week, according to CME’s FedWatch tool.
Minutes from the late-July Fed meeting, released this week, revealed that most members supported keeping rates unchanged in the near term.
Powell, set to speak at Jackson Hole on Friday, has remained cautious about any potential cuts, pointing to the inflationary uncertainty triggered by President Donald Trump’s tariffs.
Signs of resilience in the US economy, such as stronger-than-expected August PMI data, also contributed to reduced rate-cut expectations.
Higher-for-longer interest rates are considered negative for highly speculative assets like cryptocurrencies, as they drain liquidity and discourage risk-taking. Bitcoin suffered heavy losses during the Fed’s tightening cycles in 2022 and 2023, before staging a strong rally when monetary easing began in 2024.
Altcoins fell in tandem with Bitcoin, with most heading for weekly losses amid continued profit-taking from their August peaks.
Despite the current correction, Bitcoin remains in a strong uptrend this year, approaching historical highs. Some market watchers believe the bull cycle has not yet peaked and may still drive the asset to fresh record levels.
In a recent report, Tuur Demeester and Adamant Research said Bitcoin is showing signs of mid-cycle strength, projecting it could climb to $500,000 or higher in the coming phase.
According to the report, price scenarios range from a conservative outlook of a fourfold rise from current levels, to a bullish case of a tenfold increase, implying a value of about $1.2 million per coin.
“We believe we are in the middle of a cycle that could turn into one of Bitcoin’s most significant bull runs in history,” the report stated. “From current levels, there is still potential for a 4–10x rise, pointing to prices above $500,000.”
Bitcoin Remains Risky, But Still the Top Choice Among Cryptocurrencies
The report acknowledged that the path toward six-figure levels is not without risks. Exchange hacks or large-scale sales of confiscated coins, which have caused bankruptcies in the past, could exert temporary price pressures.
It also highlighted concentration risks, noting that Coinbase holds about 10% of circulating supply. However, it pointed out that ETFs like CoinShares are diversifying custody channels.
The report cited multiple supportive factors for Bitcoin, including “accelerating institutional adoption, deepening fiscal deficits, and growing government involvement – such as the US creating a national strategic Bitcoin reserve and increasing ETF holdings, which now account for about 1.4 million coins.”
It concluded by advising investors to focus on Bitcoin rather than chasing speculative altcoins with little real-world use, stating: “Allocating 5% of a portfolio to Bitcoin serves as insurance against systemic risks, while higher allocations reflect greater conviction.”
