The crypto markets sprung into gains following a volatile Tuesday after the U.S. Federal Reserve chairman Jerome Powell calmed nerves over a sooner-than-expected interest rate hike.
Bitcoin dipped below $30,000 for the first time since January, before making a 15 percent bounce all the way to $34,000. The world’s largest cryptocurrency is now up about 17 percent this year, according to data from Coindesk.
Ethereum, Bitcoin’s smaller rival, plunged as low as $1,701, its lowest since May 30 before a sharp recovery to the $2,000 region.
Regulatory pressure from China has always been a headwind for cryptocurrencies, which is why the near-50% decline from all-time highs surprised some analysts.
Perhaps an intensified regulatory crackdown was not fully priced in given how the price of Bitcoin nearly doubled over the past year.
Also, the total open interest in the Bitcoin futures market is sitting at $11.3 billion, down 59% from its April 13 peak of $27.3 billion, according to Arcane Research.
The downward trading indicates institutional investors are being “cautious” at the moment, Arcane said in a report. It also notes that three-month futures in bitcoin are in “backwardation,” meaning they are traded at a discount to current spot prices. That is generally perceived to be a bearish signal.
Although there is still a good level of optimism among crypto faithful, especially due to the sharp recovery, $30,000 remains a key support level for now, although technicals show limited upside towards $34,000-$36,000.