Bitcoin up 24 percent in August, strongest since 2017 despite U.S.-Iran clash

Bitcoin recorded its strongest August rally since 2017 despite renewed military clashes between the United States and Iran and a hawkish turn by the U.S. Federal Reserve (Fed).

On Aug. 31 local time, blockchain media outlet CryptoSlate reported that bitcoin was trading around $78,000, posting an August gain of more than 24 percent.

The rally has drawn attention because it held up despite a string of macro shocks. Brent crude rose to around $91 a barrel after U.S. air strikes on targets in Iran and Iran's attack on U.S. military facilities in Jordan. The surge in oil prices has reignited inflation fears and is fueling expectations that the Fed could keep tightening for longer.

Bitcoin absorbed Middle East geopolitical risks after last week's Fed-driven shock. Fed Chair Kevin Warsh drew a line at market expectations for rate cuts in a speech at the Jackson Hole symposium. He said inflation is still above the Fed's 2 percent target and that the top priority for policymakers is price stability.

Warsh then warned against excessive forward guidance, saying policymakers and financial markets could become trapped in a "hall of mirrors." After the remarks, the probability of a 25 basis point rate increase at the September meeting rose to 60 percent. Bitcoin at one point slipped below $77,000 before recovering the $78,000 level over the weekend.