Cryptocurrencies are recovering after Bitcoin fell from a new record

Cryptocurrencies rebounded on Wednesday, recovering much of the losses from the previous day's selloff, which came shortly after Bitcoin reached an all-time high.

Bitcoin was last up 6% at $66,315.19, according to Coin Metrics, while ether rose more than 11% to $3,785.76, its highest level since January 2022.

Bitcoin on Tuesday reached a new intraday high, for the first time since November 2021, at $69,210. It had been surging higher for weeks — rising 55% over the past month — and then fell shortly after hitting the new high.

“Yesterday looked like a sharp correction higher to me, which is fairly typical when you hit an all-time high in several years,” said David Wells, CEO of Enclave Markets.

“There will likely be a second test of the highs, and if we break above that, it could become interesting given the large options positions,” he added. “These melts involve sharp corrections that are likely related to long, leveraged momentum positions that make gains at key levels and then come back down.”

As of Wednesday morning, $100 million worth of short liquidations and $236 million in long liquidations had occurred across centralized exchanges in the past 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 causes more positions to be liquidated. In contrast, traders who bet on rising prices have to sell their assets to cover their losses.

Other cryptocurrencies rebounded with Bitcoin and Ether. Binance stock rose nearly 11%, while Solana advanced 7%. Meme coins were the biggest gainers – Dogecoin rose 18% and Shiba Inu coin rose 23%.

Cryptocurrency-related stocks also rose. Coinbase and Microstrategy rose 5% and 8%, respectively. Marathon Digital advanced nearly 6% and Riot Platforms shares rose 5.5%.

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