Cryptocurrencies witnessed a strong rebound on Wednesday, reclaiming much of the ground lost during the previous day’s sell-off, triggered by a retreat in bitcoin after hitting a new all-time high.

Bitcoin surged 7.9% to reach $67,273.54, according to Coin Metrics, while ether, the second-largest cryptocurrency, soared over 13% to $3,872.56, marking its highest level since January 2021.

On Tuesday, Bitcoin reached a new intraday record of $69,210, its first since November 2021, before experiencing a sharp pullback shortly after hitting the milestone.

Enclave Markets CEO David Wells described Tuesday’s sell-off as a “bullish sharp correction,” which is typical after reaching a multiyear all-time high. He noted the likelihood of a second test of the highs and emphasized the significance of large options positions in determining future market movements.

CoinGlass reported $100 million in short liquidations and $236 million in long liquidations across centralised exchanges in the previous 24 hours. When traders use leverage to short bitcoin and its price rises, they buy bitcoin back from the market to close their positions, leading to further price increases and liquidations.

Profit taking

David Duong, head of institutional research at Coinbase, highlighted the spot-driven profit-taking initially observed during the sell-off, followed by significant long liquidations that reset the market.

He expressed optimism about the short-term outlook, suggesting that barring a major external shock, another large drop is unlikely.