Bitcoin has staged a sharp recovery, climbing back above the $61,000 mark after a dramatic sell-off that saw more than $1.6 billion in leveraged positions wiped out across digital asset exchanges. The leading cryptocurrency was trading at approximately $61,300 on Wednesday afternoon, up around 4 per cent from its intra-week low of $58,000, according to data from CoinGecko.
The liquidation cascade was one of the largest on record, with long positions accounting for the majority of forced closures. The sell-off began late on Tuesday after bitcoin failed to hold the $63,000 resistance level, triggering a wave of stop-loss orders and margin calls. Analysts at CryptoQuant described the event as a 'classic deleveraging' that had been building for weeks as speculative interest in the market intensified.
The broader crypto market followed suit, with Ethereum falling to around $3,300 before recovering to $3,450. Total market capitalisation dropped by roughly $60 billion during the sell-off before stabilising. The volatility comes amid renewed uncertainty over US interest rate policy and a strengthening dollar, which has weighed on risk assets globally.
For UK investors, the episode underscores the extreme volatility inherent in cryptocurrency markets. Unlike traditional assets such as equities or bonds, crypto remains largely unregulated in the UK, with no protection from the Financial Services Compensation Scheme. The Financial Conduct Authority (FCA) has repeatedly warned that consumers should be prepared to lose all their money when investing in crypto.
Market participants are now watching to see whether bitcoin can hold above the psychologically important $60,000 level. A break below that threshold could trigger further selling, while a sustained move above $62,000 might renew bullish momentum. 'The market is at a critical juncture,' said one London-based crypto analyst. 'If support holds, we could see a relief rally, but the macro backdrop remains challenging.'
Source: CoinGecko, CryptoQuant