The cryptocurrency market made a big comeback on Wednesday, strongly bouncing back and regaining ground lost during a sell-off the day before. This change happened right after Bitcoin’s price reached all-time highs, setting a new standard for itself and the entire market.
The price of Bitcoin rose sharply yesterday, rising 7.9% to a high of $67,273. Ethereum also saw a big jump, going up over 13% to hit $3,872, which was the highest it had been since January 2021.
When Bitcoin broke its own ceiling and hit an all-time high of $69,210 on Tuesday, the story took an interesting turn. It reached its highest point since November 2021, which is a big deal after weeks of steady growth—a huge 55% rise in the last month. The market was shook, though, because right after this peak, there was a drop.
David Wells, the CEO of Enclave Markets, provided insights into Tuesday’s market movements, suggesting that the dip appeared to be a sharp, bullish correction, a common occurrence after hitting multiyear highs. Wells hinted at the possibility of a second surge to test these highs.
Breaking over this barrier might result in fascinating dynamics, particularly given the huge options positions at stake. Wells commented on typical market behavior in these settings, which included strong declines caused by leveraged long momentum bets that took profits at key levels before re-entering at more favorable levels.
CoinGlass’s Wednesday morning report revealed significant market activity, with $100 million in short liquidations and $236 million in long liquidations across centralized exchanges within the last 24 hours. As a result of this sort of market action, the volatile performance of buying back bitcoin to liquidate positions when its price increases is demonstrated. This routine unwittingly pushes the price further higher and triggers more liquidations.
David Duong, Coinbase’s head of institutional research, shed light on the nature of the initial sell-off, suggesting it was primarily driven by spot market profit-taking. This was evidenced by the stable open interest in perpetual futures and unchanged funding rates. However, the narrative shifted as the market encountered substantial long liquidations, prompting a reset. Duong expressed optimism about the market’s stability in the short term, barring any unforeseen major shocks.
The revival wasn’t just confined to Bitcoin and Ethereum. Other cryptocurrencies also enjoyed a rebound, with Binance coin and Solana recording impressive gains of 12% and 9.5%, respectively. Meme coins, including dogecoin and Shiba Inu coin, emerged as top performers, with jumps of 18% and 21%.
The rise of the cryptocurrency market had an effect on stocks that were linked to it. Some big names, like Coinbase and Microstrategy, saw their stock prices rise by 10% and 18%, respectively. Cipher Mining’s value went up by a huge 27%, and Iris Energy and CleanSpark also saw rises. The mining sector mirrored this optimistic outlook, but with mixed results from major players such as Riot Platforms and Marathon Digital.
