Bitcoin bounces back above $30,000 after Tuesday’s tumbledown

The cryptocurrency market recorded a recovery on Wednesday as Bitcoin climbed back above $30,000 after Tuesday’s sell-off. Other cryptocurrencies including Ether and Dogecoin also advanced.

Bitcoin rose 6.2% in the last 24 hours, to $31,676 at 10:40 AM ET, according to data provided by Coin Metrics. Ether was up 9% and XRP also rebounded 6%. 

Tuesday witnessed a massive sell-off wiping around $89 billion from the entire cryptocurrency market in 24 hours as of 6:29 AM ET on Tuesday, CoinMarketCap data reported. Bitcoin dropped more than 5.5%, while Ether, the second-largest crypto, fell over 6%, and XRP sank about 9%, according to CoinDesk data. 

The fall was triggered after the New Jersey attorney general issued a cease-and-desist letter to stop crypto lending firm BlockFi from offering interest-bearing accounts.

Wednesday’s quick rebound above $30,000 is similar to the fall in Bitcoin on June 22, this year, preceded by a brief price rally. Before the climb, bitcoin had fallen as much as 30% since reaching a multiweek high on June 15.

Bitcoin and other cryptocurrencies have tumbled since mid-May, removing nearly $1.3 trillion of their market value. Bitcoin’s volatility along with increased regulatory scrutiny in China, Europe, and the U.S., and energy concerns surrounding mining have contributed to this fall.

Market analysts still believe that Bitcoin needs to pull up beyond $32,000 to maintain a strong footing on its road to recovery. Bloomberg reported that chief investment officer at Saxo Bank, Steen Jakobsen wrote in a note, “Bitcoin and Ethereum did manage to pull a rally together after Bitcoin had dropped down through the key US$30,000 area yesterday, but needs to recover above US$32,000 sustainably to dig itself out of a hole.”

Vijay Ayyar, head of Asia-Pacific at cryptocurrency exchange Luno, termed Wednesday’s price shift as a “dead cat bounce,” where an asset briefly recovers from a prolonged decline before continuing to slide. He believes that Bitcoin’s sell-off could go lower to test the $22,000 to $24,000 level, and from then on, the cryptocurrency could trade in a range. 

At 01:43 PM ET, Bitcoin was trading up 8.38% at $32,158.85.

(With inputs from Coindesk)

Picture Credits: Reuters