The crypto markets have been left reeling after one of the most volatile days of trading in recent history — with billions of dollars of trades liquidated.
Bitcoin’s value fell as low as $30,681.50, losing 30% of its value in a single day.
The downturn was sharp and sudden, with BTC’s price falling by about $9,000 in the space of a single hour.
This subsequently caused mass panic among cryptocurrencies with a smaller market cap, with Ether tumbling below the psychologically significant $2,000 mark. As a result, it had fallen by 55% from the all-time highs of $4,362 that were set just one week earlier.
A warning from the People’s Bank of China that financial institutions shouldn’t accept digital assets as a payment method, or offer crypto-related services, had weighed heavily on investor sentiment.
Thursday has seen Bitcoin manage to recover lost ground, returning to $40,000 — helped in part by a number of high-profile endorsements of the cryptocurrency. Ether has also recouped some losses, but remains shy of $3,000 at the time of writing.
One endorsement came from Elon Musk, who contributed to the recent spate of volatility for BTC in the first place. On Twitter, he wrote that Tesla has “diamond hands” — effectively saying that the electric vehicle manufacturer has no intention of selling its crypto investment.
And Cathie Wood, the crypto-friendly fund manager who founded Ark Invest, told Bloomberg:
“We go through soul-searching times like this and scrape the models and, yes, our conviction is just as high.”
The volatile conditions once again exposed the issues that exchanges all too often experience when trading volumes intensify. Some reported a degraded service that caused delays for desperate traders trying to exit their positions, while others went down altogether.
Now, it remains to be seen whether the rally amounts to a “dead cat bounce,” or whether the worst is over following BTC’s lows near $30,000.