- Bitcoin fell to a low of $11,151, which is being attributed to the dollar’s revitalized strength
- The price retreat is not a deterrent for high cryptocurrency demand from institutional investors
- The firm’s Bitcoin purchase is also a reflection of the faith of industry leaders in Bitcoin –a cryptocurrency with more long-term appreciation potential than cash.
The king of cryptocurrency just witnessed 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 on Tuesday, Bitcoin retreated and reversed its gains in the last five days, dipping to $11,151 before closing at $11,398 on September 2. With Bitcoin’s retreat, the effects were noticeable in other cryptocurrencies as well. For instance, Ethereum dropped to $439, marking an 8% retreat from the previous day.
An important factor behind this decline could be the recent display of strength by the US dollar. For instance, Edward Moya, senior market analyst at Oanda, told Bloomberg that a strong greenback has led to a decrease in the investors’ appetite for cryptocurrency. Still, the dollar softening over 5% could be a catalyst for Bitcoin to breach the 12,000 level, she added. However, as of now, crypto users will have to deal with Bitcoin starting to lose traction under current circumstances.
There has been an inverse correlation between Bitcoin and the US dollar in recent months. As investors feared that the fiat currency would further lose value, they were prompt to amass crypto assets like Bitcoin and gold as their chosen form of wealth, which they believe would hold much better value in times of economic uncertainty.
The retreat from $12,000 could mean wider correction in the in the crypto markets, said analyst Michaël van de Poppe, who is also expecting a short-term bounce from the current levels. However, investors should take some money out of the market, as there’s a significant drop on $BTC which couldn’t hold the $11,600 area, he said on Twitter.
However, the dip is no reason for crypto investors to fret about, as proponents of the cryptocurrency are pretty bullish about increasing demand from institutional investors. For instance, Fidelity Investments launched its first Bitcoin fund last week.
On August 11, MicroStrategy — the world’s largest business intelligence firm — purchased 21,454 Bitcoin worth $250 million. As Michael Saylor, CEO, MicroStrategy, stated, Bitcoin is ‘digital gold’, and has proved its potential as ‘harder, stronger, faster, and smarter’ than any other form of money which has preceded it. The firm’s Bitcoin purchase is also a reflection of the faith of industry leaders in Bitcoin –a cryptocurrency with more long-term appreciation potential than cash.
Market conditions notwithstanding, cryptocurrency is in good shape, and not likely to disappoint users anytime soon.