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Cryptocurrencies rallied on Wednesday, recouping much of the losses from the previous day's selloff, which occurred shortly after Bitcoin hit an all-time high.
According to Coin Metrics, Bitcoin was last up 6% at $66,315.19, while Ether shot up more than 11% to $3,785.76, its highest level since January 2022.
On Tuesday, Bitcoin hit a new intraday record of $69,210 for the first time since November 2021. The price had been rising for weeks – up 55% in the last month – and plunged shortly after reaching the new high.
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Bitcoin is recovering from Tuesday's sell-off
“Yesterday it seemed like a sharp upward correction to me, which is pretty typical when you hit a multi-year all-time high,” said David Wells, CEO of Enclave Markets.
“There will likely be a second test of the highs and if we break through that, things could get interesting given the large options positions,” he added. “These declines include sharp corrections, which are likely related to leveraged long momentum positions booking profits at key levels and then returning lower.”
As of Wednesday morning, $100 million in short liquidations and $236 million in long liquidations occurred on centralized exchanges in the past 24 hours, according to CoinGlass.
When traders use leverage to sell Bitcoin and the price of the cryptocurrency rises, they buy Bitcoin back from the market to close their positions, driving up the price and causing more positions to be liquidated. In contrast, traders who bet on a price rise must sell their assets to cover their losses.
Other crypto coins rallied with Bitcoin and Ether. Binance rose almost 11% while Solana gained 7%. Meme coins were the biggest winners – Dogecoin rose 18% and Shiba Inu coin rose 23%.
Crypto-related stocks also rose. Coinbase and Microstrategy gained 5% and 8%, respectively. Marathon Digital rose nearly 6% and Riot Platforms rose 5.5%.
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