Bitcoin price: World's top cryptocurrency tanks and these could be the reasons

Economic Times

a day ago

ETMarkets.com Bitcoin price crash today below $116K has caught investors off guard as the world's top cryptocurrency continues to face pressure from rising U.S. interest rates, weak August seasonality, and tightening crypto regulations. Bitcoin dropped over 3% in 24 hours, slipping from recent highs near $122K to around $115,120 at the time of writing.
Bitcoin price has taken a sharp nosedive, slipping below $116,000 today, August 1, 2025, raising concerns across the crypto community. After a strong July run, the world's most popular cryptocurrency is now facing intense selling pressure, fueled by a mix of macro headwinds, regulatory uncertainty, and technical resistance. So, what's causing this unexpected Bitcoin price drop? The biggest trigger for this Bitcoin price decline appears to be a mix of macroeconomic pressure, shifting investor sentiment, and weaker-than-expected momentum. According to data from 10x Research and CoinDesk, August has historically been a tough month for Bitcoin — and the trend seems to be holding true in 2025.
The recent fall isn't just random volatility. There are clear signals that seasoned traders and institutions are dialing back risk, especially as the U.S. Federal Reserve holds off on interest rate cuts and maintains a tighter policy stance. The biggest trigger for the Bitcoin price decline came earlier this week when the Federal Reserve kept interest rates steady between 4.25% and 4.5%, but clearly signaled there won't be a rate cut anytime soon. This move disappointed investors who had hoped for easier monetary policy to drive risk assets higher, including cryptocurrencies like Bitcoin. Adding fuel to the fire, strong U.S. job market data released just before the Fed's announcement reinforced the idea that the central bank can afford to keep rates high—bad news for risk-on assets like crypto. High interest rates usually mean investors prefer safer assets, draining liquidity from the digital asset market.
August has historically been a tough month for Bitcoin. According to analysts at 10x Research, Bitcoin has shown average declines between 5% and 20% in August over the past 10 years. That trend seems to be playing out again this year. The report also notes that Bitcoin's 30-day capital inflows—a key metric of how much new money is entering the market—have dropped from $62.4 billion to $59.3 billion recently. This decline suggests that fresh buying interest is fading, contributing to the current price slump. From a technical chart perspective, Bitcoin failed to break above the critical Fibonacci resistance level near $122,000. This level had been closely watched by traders as a major breakout zone. When Bitcoin couldn't push through it, many traders started locking in profits, triggering a wave of selling. Now, analysts are watching key support levels between $112K and $110K. A break below this zone could send Bitcoin spiraling further, with some warning of a potential drop to $106K in the coming days if selling pressure intensifies. Bitcoin follows a clear four-year cycle, with explosive bull runs after each halving event, followed by deep corrections. 2011: From cents to $30, then crash
From cents to $30, then crash 2013: $1,200 peak, then fell below $200
$1,200 peak, then fell below $200 2017: $20,000 top, down to $3K
$20,000 top, down to $3K 2021: $69,000 all-time high, then crash
$69,000 all-time high, then crash 2025: Topped near $122K post-halving, now below $116K It often dips in August, with election years bringing added volatility. Investors watch for these repeating boom-and-bust cycles. Another factor weighing on crypto is the rising talk of regulation. A recent White House report on digital assets has renewed discussions about federal oversight of cryptocurrencies. While aimed at protecting investors and preventing fraud, it also introduces uncertainty about how crypto will be regulated in the near future.
On top of that, new legislation like the Genius Act, which aims to crack down on illicit crypto transactions, is raising concerns among investors. Any increased regulation—even with good intentions—can reduce investor confidence in the short term. There's also a broader macro concern at play. According to a recent Forbes report, experts are warning about a possible "Fed doom loop" where U.S. debt levels spiral out of control, triggering a dollar crisis. If this scenario plays out, some believe Bitcoin could either crash in the short term or later surge as a hedge against a collapsing financial system.
Veteran investor Ray Dalio even suggested allocating 15% of portfolios to alternative assets like Bitcoin and gold, signaling a growing worry about traditional financial stability. But until those fears play out, uncertainty is keeping many investors on edge. Right now, Bitcoin is trading around $115,000, down about 3% from yesterday. It's still up significantly from its lows earlier this year, but the short-term outlook is cautious. Unless Bitcoin can regain momentum and break back above $120K, it may continue to consolidate or even slip toward the $110K zone. A rebound in capital inflows and a shift in Fed policy would be the most likely bullish triggers—but those aren't expected anytime soon. Right now, Bitcoin is trying to hold above the $115K mark, but it's far from stable. Key support sits between $112K and $106K, while resistance remains strong near $122K. If momentum doesn't return soon and inflows continue to shrink, we could see a more extended correction — possibly testing lower zones in the coming weeks.
However, if market conditions stabilize and macro trends shift, bulls may find a new entry point and push Bitcoin back toward $125K and beyond. For anyone holding or watching Bitcoin closely, here are the key things to keep an eye on: U.S. economic data , especially inflation and jobs numbers
, especially inflation and jobs numbers Federal Reserve meeting minutes and any changes in tone
and any changes in tone Crypto regulatory developments , including new legislation or SEC actions
, including new legislation or SEC actions Capital inflow data , showing if big investors are buying or backing off
, showing if big investors are buying or backing off Support levels, especially around $112K and $106K
1. Why is the Bitcoin price falling in August 2025? Bitcoin is dropping due to Fed policy, seasonal weakness, and slowing crypto inflows.
2. What's the key support level for Bitcoin right now? Bitcoin is testing support around $112K, with risk of dipping below $110K.
3. How is the Federal Reserve affecting Bitcoin prices? The Fed's rate pause and no sign of cuts are making crypto investors cautious.
4. What role does the new White House crypto regulation play? The new report is adding fear and uncertainty around future crypto rules.
5. Should investors worry about the 'doom loop' and dollar crisis? Yes, some experts say it could trigger bigger moves in Bitcoin long-term.