Cryptocurrencies recover after Bitcoin retreats from new record high

Cryptocurrencies bounced back on Wednesday, recouping much of the losses from the previous day’s selloff that came soon after bitcoin hit an all-time high.

Bitcoin jumped 7.2% to $66,801.38, according to Coin Metrics, while ether jumped more than 12% to $3,793.99, its highest level since January 2022.

On Tuesday, bitcoin hit a new intraday high of $69,210 for the first time since November 2021. It had been rallying for weeks — up 55% in the past month — before collapsing shortly after hitting the new high.

“Yesterday looked like a bullish correction to me, which is pretty typical when you hit a multi-year all-time high,” said Enclave Markets CEO David Wells.

“There is likely to be a second test of the highs and if we break through it, it could get interesting given the large options positions,” he added. “These meltdowns involve sharp corrections, likely related to long leveraged positions that take profits at key levels, then return lower.”

As of Wednesday morning, $100 million in short liquidations and $236 million in long liquidations had occurred on centralized exchanges in the previous 24 hours, according to CoinGlass.

When traders use leverage to short bitcoin and the price of the cryptocurrency rises, they buy bitcoin back from the market to close their positions, which pushes the price up and leads to more positions being liquidated. In contrast, traders who bet on an increase in price must sell their assets to cover their losses.

Other cryptocurrencies rebounded with Bitcoin and Ether. Binance jumped nearly 11%, while Solana advanced 7%. Meme coins were the most profitable – with dogecoin up 18% and the Shiba Inu coin jumped 23%.

Crypto-related stocks also rose. Coinbase and Micro strategy have gained 5% and 8% respectively. Digital marathon advanced by nearly 6% and Riot Platforms rose 5.5%.

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