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.