Bitcoin and other cryptocurrencies recovered Wednesday after a brutal sell-off, with the world’s biggest digital coin climbing back above $30,000.
The price of bitcoin traded as high as $32,383 Wednesday, according to Coin Metrics, and last traded at $31,989, about 7% up on the day. Smaller cryptocurrencies ether and XRP also rebounded, up around 9% and 6% respectively.
The crypto market saw significant selling on Tuesday, with bitcoin falling below the $30,000 mark for the first time since June 22.
The plunge came on the back of news that the New Jersey attorney general issued a cease-and-desist letter to crypto lending firm BlockFi, ordering it to stop offering interest-bearing accounts.
The reason for the move higher Wednesday wasn’t immediately clear. Cryptocurrencies often undergo severe price swings. Bitcoin, for example, rallied to an all-time high of almost $65,000 in April before halving in value in the months that followed.
Vijay Ayyar, head of Asia-Pacific at cryptocurrency exchange Luno, said Wednesday’s price move was likely a “dead cat bounce,” where an asset briefly recovers from a prolonged decline before continuing to slide.
Unless bitcoin can climb above $32,000-$33,000, Ayyar expects more downside, with the top cryptocurrency potentially tumbling as low as $24,000-$25,000.
“We saw broad market rallies across the board last night as well, and I think crypto is just playing off of that,” Ayyar told CNBC.
“In general, there are lot of macro factors weighing down on risk-on assets at the moment — inflation worries, Covid, and with crypto we’ve got more specific worries such as much more regulatory oversight.”