The price of Bitcoin rebounded above $34,000 on Wednesday, a day after the sell off which saw the price drop below $30,000 for the first time since January.
There were some fears that a drop below $30,000 would have opened the doors to further weakness, with some analysts forecasting a drop below $20,000, but that scenario has not played out so far.
Instead, after dropping below $29,000 yesterday, Bitcoin and other major cryptocurrencies have staged a rebound.
“It has probably weathered the storm in the near term, and I'll pick some numbers out of the matrix and say $30,000 to $40,000 will cover the rest of the week/weekend,” said Jeffrey Halley, Senior Market Analyst at OANDA.
Bitcoin has had a rollercoaster year, hitting a high near $65,000 in April before paring back to its current level amid slowing institutional adoption and prospects of tighter regulation in the cryptocurrency market.
The latest crackdown in China was the likely catalyst for the sell off earlier this week as mining companies in Sichuan province were forced to shutter their doors and the PBoC warned some banks and payment firms to stamp out transactions related to digital assets.
The environmental impact of cryptocurrency mining and transactions has also recently weighed on prices after Tesla (NASDAQ:TSLA) CEO Elon Musk said his company would stop accepting Bitcoin due to the energy use of the network. It is estimated the Bitcoin network uses as much power as a country the size of Sweden or Argentina.
With companies under pressure to satisfy ESG investors, firms may be more cautious about holding or dealing in Bitcoin and other energy intensive crypto assets.
At 13:08BST, Bitcoin was trading around $33,900, up 8.3% in the last 24 hours. Ethereum, the second largest cryptocurrency by market cap, was trading around $2,000 after hitting a low near $1,700 on Tuesday.