Bitcoin saw a double-digit rebound Wednesday after weeks of struggling to recover above the $4,000 mark.
The world’s largest cryptocurrency spiked as much as 16 percent, hitting a high of $4,341.44, according to data from CoinDesk.
The upward move was an abrupt turnaround from bitcoin’s terrible Thanksgiving week. The cryptocurrency tanked 35 percent over seven days, falling below $3,500 for the first time in 14 months. At one point, it was down 80 percent from its all-time high and within range of its worst-ever bear markets.
Other major cryptocurrencies also rallied Wednesday afternoon. XRP, the second largest by market cap, rose 12 percent. Ether, the third biggest, was up 14 percent, according to CoinMarketCap.com. The entire cryptocurrency market capitalization rallied by more than $20 billion in 24 hours, according to data from CoinMarketCap.
Bitcoin is still deeply in the red this year. The cryptocurrency has dropped by more than 68 percent in 2018, and is now off more than 77 percent from its all-time high.
Andy Bromberg, co-founder and president of CoinList, a platform for listing digital tokens, said Wednesday’s recovery may have been the result of investors “digging back in after the craziness of last week.”
“Today’s rise is mostly a reaction to the precipitous drops last week and people thinking that may have been an overreaction,” Bromberg told CNBC.
Because crypto markets are still relatively small, one buyer placing an especially large “buy” order can “kick off an avalanche,” Bromberg said.
Brian Kelly, CEO of BKCM, said bitcoin may have also been boosted by “hash wars” over bitcoin cash finally coming to an end. That digital currency split into two competing versions earlier in November— “Bitcoin ABC” and “Bitcoin SV”.
“You’re seeing the bitcoin cash saga play itself out,” Kelly said. “People were funding a lot of that by selling bitcoin, so one element of sellers has left the market.”
While Kelly said positive headlines this week didn’t necessarily result in the double-digit percent spike, it was good for the overall sentiment in crypto markets.
“People are starting to understand that this is a legitimate asset class,” Kelly said.
Bitcoin got the backing of a key figurehead on Wall Street this week. Jeff Sprecher, chairman of the New York Stock Exchange and CEO of ICE, said at the Consensus Invest conference Tuesday that despite headlines of cryptocurrencies flopping, digital assets have a future in regulated markets.
Sprecher’s Intercontinental Exchange, parent company of the New York Stock Exchange, is backing a version of bitcoin futures through a start-up called Bakkt that go live in January. Nasdaq and VanEck are also planning to launch cryptocurrency products, which include bitcoin futures, in the first quarter of next year.
SEC Chairman Jay Clayton said at the same Consensus conference that there are certain problems in the market that need to be solved before he would feel “comfortable” greenlighting an exchange traded fund, or ETF. But he didn’t rule out the possibility of that investment vehicle being approved once the issues are resolved.