Bitcoin Price Sees Biggest Drop In 30 Days As US Dollar Shows Renewed Strength

Bitcoin has just registered its biggest price drop in the last 30 days as it failed to sustain a break above $12,000 for the fourth time during this period.

After closing at $11,923 Tuesday, the benchmark crypto retreated and reversed its gains in the last five days, falling to as much as $11,151 before closing at $11,398 Wednesday. When Bitcoin retreated, most of the other cryptocurrencies followed, with Ethereum dropping to $439, an 8% retreat from the previous day.

One key reason for the decline is the dollar’s revitalized strength. Edward Moya, a senior market analyst at Oanda, said a strong greenback tends to decrease the investor appetite for cryptocurrency. Still, the dollar softening over 5% could be a catalyst for Bitcoin to breach the 12,000 level, Moya told Bloomberg. "Bitcoin is starting to lose some momentum," he admitted.

Bitcoin has a strong inverse correlation with the U.S. dollar in recent months. As investors feared that the greenback would further lose value, they flock to asset classes like Bitcoin and gold, which have shown they can retain or appreciate in value in times of economic uncertainty. Both Bitcoin and gold have had strong price performances this year.

The retreat from $12,000 could mean wider correction in the crypto markets, said Michaël van de Poppe, an analyst at Cointelegraph. He is expecting a short term bounce from the current levels but says investors should take some money out of the market. "You take some profits on the way up. Significant drop on $BTC here, couldn’t hold the $11,600 area," he said on Twitter.

The price retreat does not spell doom for the crypto markets, but as analysts noted, the increasing demand from institutional investors, with many coming in slowly and methodically, said Michael Novograzt, founder of Galaxy Investment Partners. "We’ve crossed the Rubicon -- Bitcoin is not going away, the Ethereum project is not going away, it’s got critical mass and you are going to continue to see innovation after innovation," he told Bloomberg.