Bitcoin, cryptocurrencies bounce back after price crash

The price of bitcoin bounced higher on Wednesday, building on gains from the previous day when it recovered from a drop to its lowest levels in more than two months amid a broad-based selloff of digital assets.

Bitcoin was trading at $7,845.50 by 04:23 AM ET (09:23 AM GMT) on the Bitfinex exchange, after falling as low as $6,000 on Tuesday, the weakest level since mid-November.

Even with the price recovery, bitcoin remains down around 23% for February.

Bitcoin and rival cryptocurrencies strengthened after the testimony of two U.S. financial regulatory commission chairmen before the Senate Banking Committee on the regulatory fate of digital currencies was not as negative as many investors had feared.

Securities and Exchange Commission Chairman Jay Clayton and Commodity Futures Trading Commission Chairman Christopher Giancarlo struck a balanced tone on the need to protect consumers without a heavy-handed crackdown on technological innovation.

Their testimony came amid a crackdown on cryptocurrency exchanges in South Korea and China.

Cryptocurrency prices have fallen sharply since early January as governments clamped down on trading and major banks implemented a ban on using credit cards to buy digital currencies.

Prices have also been hit by fears over whether last year’s breathtaking rally in digital assets was justified. U.S. regulators are investigating the Bitfinex exchange over its links to digital asset Tether, amid fears that it is being used to artificially inflate bitcoin prices.

The rebound in bitcoin came as global equities recovered from a steep price slump.

Other major cryptocurrencies also rebounded strongly, with Ethereum, the world’s second largest cryptocurrency by market cap, climbing around 31% to $791 on the Bitfinex exchange.

The third largest cryptocurrency Ripple gained around 27% to trade at $0.75.

Meanwhile, Goldman Sachs Group Inc.’s global head of investment research said the tumble in cryptocurrencies that erased nearly $500 billion of market value over the past month could get a lot worse.