Cryptos are not getting back on their feet; Bitcoin drops 10% in August

(Sharecast News) - Moderate falls in the cryptocurrency market. Bitcoin (BTC) drops 0.4% in the last 24 hours and falls below $26,000, while Ethereum (ETH) retreats another 0.4% and is close to $1,650. Digital assets head into the last week of August with outstanding losses in the eighth month of the year. Bitcoin, for example, has dropped more than 10% in recent weeks after the scarce news about spot BTC exchange-traded funds (ETFs) or inflationary alerts from the Federal Reserve (Fed), which have caused the reigning cryptocurrency to devalue by more than $3,000 since the beginning of the month.

The truth is that the latest developments do not seem to reassure crypto investors either. In his speech in Jackson Hole, Fed Chairman, Jerome Powell, assured that the Fed is ready to raise interest rates "if appropriate" to bring inflation back to the 2% target.

"We see the current stance of policy as restrictive, putting downward pressure on economic activity, hiring, and inflation. But we cannot identify with certainty the neutral rate of interest, and thus there is always uncertainty about the precise level of monetary policy restraint," Powell added, although he did not indicate what the central bank's next move will be.

On the other hand, the U.S. Treasury Department introduced new tax rules for cryptocurrency brokers in the country last Friday. The measures, which seek to reduce the number of taxpayers evading taxes with their digital assets, could bring in about $28 billion over 10 years and are proposed to take effect in 2025.

"This is part of Treasury's broader effort to close the tax gap, address the tax avoidance risks posed by digital assets, and help ensure that everyone plays by the same set of rules," The Treasury declared in a statement. On the other hand, the cryptocurrency sector has been generally opposed to this proposal.

Therefore, the market appears to be in a clear "fear" scenario according to Coinmarketcap's Fear and Greed Index, which stands at levels from last January, shortly after the FTX bankruptcy. A downward reading of this benchmark can indicate "extreme fear", and that can be interpreted as a sign that investors are overly concerned and is usually understood as a buying opportunity. Conversely, a broad "greed" sentiment may indicate that the market is about to undergo a correction.

In other market news, there have been significant drops in most altcoins. Dogecoin (DOGE) falls around 1.6%, while Ripple (XRP) retreats around 2% and Cardano (ADA) drops 0.8%.