Bitcoin posted its largest one-day decline in about a month just a day after reaching $12,000. Other digital currencies registered deeper declines.
The world’s largest cryptocurrency fell as much as 6.9% to $11,187 in New York on Wednesday before recouping some of the losses. The drop was the most since early August. Bitcoin last touched $12,000 two weeks ago.
“After another failed attempt of breaking free from the $12,000 level, Bitcoin is starting to lose some momentum,” said Edward Moya, senior market analyst at Oanda. While a strong dollar tends to dent appetite for the cryptocurrency and there are signs its popularity is fading among retail investors, if the greenback softens over 5% it could be the catalyst to help Bitcoin breach that threshold again, if its fundamentals improve, he said.
Peer coins also retreated Wednesday, with Bitcoin Cash, Litecoin and Ether each falling at least 10%. The Bloomberg Galaxy Crypto Index, which tracks some of the biggest digital currencies, fell more than 9%.
Still, long-time advocates point to increasing demand from institutional investors. Fidelity Investments launched its first Bitcoin fund last week.
Institutional investors are coming in slowly and methodically, Michael Novogratz, founder and chief executive officer of Galaxy Investment Partners, told BNN Bloomberg on Tuesday. The billionaire investor remains bullish on the sector.
“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,” said Novogratz. “Cryptocurrency is here for good.”