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A rebound in bitcoin held strong on Thursday, even as the U.S. Treasury Department called for new rules that would require large cryptocurrency transfers to be reported to the Internal Revenue Service and the Federal Reserve flagged the risks cryptocurrencies posed to financial stability.

The comments from U.S. officials come one day after a brutal sell-off on concerns over tighter regulation in China and unease over the extent of leveraged positions among investors sank the world's biggest cryptocurrency to its lowest level since late January. read more

Bitcoin was recently up more than 4% at around $40,000, after earlier jumping more than 10%. Thursdays gains brought the currencys price to approximately where it traded in early February. Smaller rival ether was up around 14% after Wednesdays 28% tumble.

The rally in cryptocurrencies Thursday came after prominent backers such as Ark Invest's (ARKK.P) Cathie Wood and carmaker Tesla's (TSLA.O) Elon Musk indicated their support on Wednesday.

Wood said in an interview with Bloomberg that she was still sticking to her $500,000 forecast. Musk reiterated that Tesla was holding onto its bitcoin investments. read more

"It's too early to say if the rebound we've seen off the lows in crypto has legs," said Chris Weston, head of research at brokerage Pepperstone in Melbourne.

"I question if we will get a chance to catch our breath or is there more volatility in store?"

Weston pointed to how $9.13 billion of cryptocurrency positions had been liquidated across exchanges over 24 hours, and $532 billion in total volume transacted.

Wednesday's declines in both digital assets were one of their biggest daily percentage moves in more than a year, with investors rushing to exit trades that until recently were outperforming traditional markets such as stocks and bonds.

Wednesday's volatility fuelled record turnover. Data from CME showed volumes on bitcoin futures soared to 32,356 contracts, more than three times the average volumes for May.

While turnover on Thursday declined from the frenzied volumes seen overnight, May contracts still showed more than 6,000 contracts traded. Similar trends were observed on CME's micro bitcoin futures where nearly 95,000 contracts were traded on Wednesday.

The catalyst was a statement by Chinese financial industry bodies banning the use of cryptocurrencies in payment and settlement. China also prohibited institutions from providing crypto-related products or exchange services between cryptocurrencies and the yuan or foreign currencies. read more

"A defining factor for China's decision is also likely to be their strong push towards a central bank digital currency solution," said Alexander Ruchti, next-generation research analyst at Julius Baer.

"The past week's steep and rapid decline once more underpins how susceptible the segment is towards sentiment swings."

Bitcoin had been under pressure after a series of tweets last week by Musk, a major cryptocurrency backer, chiefly his reversal on Tesla accepting bitcoin as payment.

The slide forced some investors to close out leveraged positions in cryptocurrency derivatives, which caused prices to fall further, traders said.

Still, some analysts saw Thursday's gains as a sign that investor sentiment remains bullish.

"People consider this as a 'buy-the-dip' moment, and many consider this as 'the last chance to buy bitcoin cheap'," said Ruud Feltkamp, chief executive at crypto trading bot Cryptohopper. "The next few months will show if the bull market will continue or if it's the start of the end of its run."

CROWDED ETHER

Coming off a six-fold jump on the back of rising usage in non-fungible tokens on digital art platforms, ether's sell-off was far more damaging, with the digital currency trading 39% below its record highs.

James Quinn, managing director at Q9 Capital, a Hong Kong-based cryptocurrency private wealth manager, said the selling reflected huge crowded positions in ether.

Ether is still up more than 270% so far this year, however, outperforming bitcoin's year-to-date gain of 37%.

"This can also be the moment when bitcoin starts reclaiming the market momentum from ether and other altcoins that have had room to outperform BTC in the last four months," said Ulrik Lykke, executive director at crypto hedge fund ARK36.

While some retail traders saw missed opportunities in the slide, others saw the rout as a chance to pick up digital assets on the cheap.

"There has certainly been a change in tone in the market after the sell-off. But this also a market that has shown extraordinary returns over the last year to 18 months," said Seth Ginns, managing partner and head of liquid investments at CoinFund.

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Recovery rally takes bitcoin back above $40k; Treasury proposal weighs on gains - Reuters

The price of Bitcoin has collapsed, yet again, just like this time last year.

Those who got in on the ground floor years ago have made a killing. Those who got in last year after the crash and exited shortly after Elon Musk took the plunge in February have joined the ranks of the uber-rich.

And for all the criticism about its volatility, instability and environmental irresponsibility, we probably haven't seen the last Bitcoin rally.

But before we get around to considering that question, let's just back-track a little.

Well, maybe just a little more than a little. Let's go all the way back to 1637 to Holland, then one of the most powerful nations in Europe.

That was the year that tulip mania finally ran out of puff, the year when one of the most insane investment bubbles of all time burst spectacularly. And yes, we're talking about tulips, the flowers.

Originally from Turkey, they became highly fashionable in the early part of the 1600s, sought after by the well-to-do and, ultimately, a symbol of wealth and power deemed an absolute necessity for anyone with social pretensions or ambitions.

By 1634, demand for tulip bulbs which not only were rare but fragile was such that the trade crowded out most other Dutch industries. At its peak, a single tulip bulb cost six times the average income, with some going for as much as $1 million in today's money. They were traded on stock exchanges in Amsterdam, Rotterdam and other Dutch cities.

Three years later, it all came to a crashing halt. A large swathe of the population had borrowed to buy bulbs, certain that prices would only ever go higher, and when the market turned, it did so with a vengeance as investors were forced to dump their, um, flowers.

If this sounds too ridiculous to be true, you're right. But it really did happen.

A lot, as it turns out.

Economics is really a study of human behaviour at both an individual and a group level and there are a couple of fundamental laws, or assumptions, used as the bedrock.

One is that individuals always act rationally. The other is that everyone always acts in their own best interest.

That explains why economists have such a dismal track record in forecasting anything. Not sure about you, but your correspondent's behaviour occasionally has veered towards the irrational and certainly not in anyone's best interest. Multiply that several billion times and you have a recipe for unconstrained lunacy.

It's why we have booms and busts, prosperity and poverty, wars and famine, why we lurch from one extreme to the other. You can't just assume it all away and pretend it's not there.

Which brings us to Bitcoin and the mysterious world of cryptocurrencies.

Bitcoin is just one of more than 4,000 cryptocurrencies. The unifying feature of almost all of them is that they employ what's known as blockchain technology a record-keeping or ledger system to conduct transactions. While it is a complex system, it relies on a simple idea: to ensure stored data is public and cannot be manipulated or controlled by any party, state or individual.

Blockchain technology has huge potential for almost every facet of a data-dependent world, from conducting elections to healthcare to financial services. The Australian Securities Exchange uses it for its transactions.

While Bitcoin was among the first to use the technology, it doesn't own it. That's something many Bitcoin investors don't get. They're quick to extol the virtues of blockchain but don't understand that Bitcoin is just one of many thousands of organisations that employ it.

Not only that, there are as many different variations and applications of the technology as there are users. The technology can be customised, depending on how you want to use it. And Bitcoin's blockchain has quite a few deficiencies.

When it was launched in 2009, Bitcoin devotees declared the decentralised ledger system would render the global financial system obsolete. Central banks would have no place in the world and Bitcoin would replace national or fiat currencies.

That hasn't happened. Ironically, more than a decade down the track, Bitcoin remains priced in US dollars, the world's reserve currency, and investors continue to measure their wealth in good old dollars and cents. In an even greater insult, central banks, including the Reserve Bank of Australia, are actively pursuing their own forms of digital currencies.

Investors are jumping into ETFs at record levels but are they a safe investment? We ask the experts.

And while Bitcoin remains the poster child, and by far the biggest cryptocurrency, it has spawned legions of imitators, some of which hold far more promise than the original.

Elon Musk, the Tesla car founder who splurged $US1.5 billion ($1.9 billion) on Bitcoin in February, now concedes the currency uses far too much electricity. It's an environmental disaster in the making so he's now plugging Dogecoin, the joke currency based upon a dog.

What few investors will admit, however, is that Bitcoin is slow and hugely expensive to use. That's not just compared to other digital currencies. It's way more expensive than conventional transaction methods.

Among its rivals, Ethereum, the second-biggest network, is often touted as the system that eventually will dominate. But its transaction fees are horrendous as well. It operates a little like Uber, with surge pricing.

Last weekend, for instance, if you'd gone out to lunch on Saturday and spent $120 and then tried to pay with Ether, you would have been hit with a $385 transaction fee.

But who needs to use these systems when you can create your own blockchain and cryptocurrency? Binance, a major exchange, runs off the Ethereum network and offers others the chance to piggyback its system.

That has attracted some unusual traffic. Blockchain transactions may be public but the identity of those behind them can be obscured. That's why authorities have been concerned about nefarious activity such as drug trafficking, money laundering and terrorism financing.

Among the many new currencies is one to facilitate online pornography subscriptions, the aptly titled Cumrocket. And like most fields of human endeavour, there's no escaping toilet humour. PooCoin launched last month along with a stern warning from UK authorities about the potential risks of investing in it. Or stepping in it.

One of the few operations that seems to have a real business model, along with executives, employees and actual offices, is XRP, the currency launched by Ripple Labs. It is aiming to compete or replace the SWIFT international payments transfer system used by most banks. It is quick and cheap.

Perhaps because of that visibility, it has become the subject of a lawsuit by America's Security and Exchange Commission, which has charged it and two executives with selling $US1.3 billion in unregistered securities.

Interestingly, SWIFT is fighting back. It is attempting to compete with Ripple's blockchain technology with a rival technology, Global Payments Innovation.

Bitcoin is a bubble. Last Wednesday, it went through some wild gyrations, dropping 33 per cent before surging by a similar amount to end the session down 8 per cent.

From the outset, it was designed to become increasingly rare.

Only 21 million coins exist. Most already have been released and the final one won't be mined until next century. That was a deliberate attempt to make its value rise, along the same lines as gold, so that it could become a safe harbour, a store of wealth when things turn ugly.

US magazine Newsweek says it has found the enigmatic creator of the online currency bitcoin.

While its value has risen exponentially in recent years, its incredible volatility makes it anything but a safe harbour. Given it isn't much good for transactions and holds no proprietary technology or intellectual property, about the only thing it is good for is speculation.

On Friday, it was bouncing around more than 10 per cent every few hours, ending another 9 per cent lower, and at $US39,000 was well below the $US63,346 peak last month. That makes it a bargain, some reckon.

Maybe. But remember, it's a virtual commodity. It doesn't actually exist. No-one even really knows whether Satoshi Nakamoto, the mythical founder, is real.

Who knows, it could go beyond $US100,000 sometime in the near future. But if everyone suddenly decides to abide by the rules of economics and starts acting rationally, be prepared to lose everything.

At least you can tiptoe through tulips.

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Bitcoin has just crashed and we may see another rally. But is this the time to buy? - ABC News

CNBC.com's Jordan Smith brings you the day's top business news headlines. On today's show, Kate Rooney breaks down new data showing that bigger investors, or "whales" were the ones buying bitcoin at the lows of yesterday's selloff. Plus, Michael Wayland explains how Ford's new all-electric F-150 Lightning plans to compete with General Motors and Tesla.

The crypto collapse: Here's what's behind bitcoin's sudden drop

The dramatic pullback in bitcoin and other cryptocurrencies comes as a flurry of negative headlines and catalysts, from Tesla CEO Elon Musk to a new round of regulations by the Chinese government, have hit an asset sector that has been characterized by extreme volatility since it was created.

The flagship cryptocurrency fell to more than three-month lows on Wednesday, dropping to about $30,000 at one point for a pullback of more than 30% and continuing a week of selling in the crypto space. Ether, the main coin for the Ethereum blockchain network, was also down sharply and broke below $2,000 at one point, a more than 40% drop in less than 24 hours.

Ford prices new electric F-150 Lightning pickup from $40,000 to $90,000

DEARBORN, Mich. Ford Motor says its new electric F-150 Lightning pickup will be profitable when it arrives in U.S. dealer showrooms next year, with pricing between about $40,000 and $90,000.

The pickup, which Ford officially unveiled Wednesday night, resembles the automaker's current F-150 but includes new interior and exterior features. It's powered by two electric motors and a battery pack instead of a traditional gas engine. It will be offered in two battery options with targeted ranges of 230 miles or 300 miles, Ford said.

The F-150 Lightning is arguably the most important vehicle to the company in years. It is expected to safeguard the Ford F-Series' decades-long sales leadership in the U.S. amid the industry's expected shift to EVs. F-Series includes the F-150 and its larger siblings. It is a roughly $42 billion business for Ford and its biggest profit center.

Oatly shares soar 18% in company's public market debut on Nasdaq

Oatly shares ended the day up more than 18% after the company's public market debut Thursday.

The stock's opening trade was $22.12 just before noon, giving it a market value of $13.1 billion and putting shares about 30% above the initial public offering price. Shares lost some of those gains in the minutes following the first trade.

On Wednesday night, the Swedish company priced its U.S. initial public offering at $17 per share, at the top of its indicated range, raising $1.4 billion. At that price, the implied valuation is $10 billion, well above the current market value of another company that specializes in making substitutes for animal products, Beyond Meat. The oat-milk maker is trading on the Nasdaq under the stock ticker "OTLY."

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Bitcoin recovers after plunge that shaved $1 trillion off crypto market: CNBC After Hours - CNBC

Crypto bull Meltem Demirors said Wednesday she believes the recent turbulence in bitcoin and ether are positive long-term developments, contending the optimistic story around the digital assets remains intact.

"It's been really frothy. There was a lot of leverage in the markets. Some of that got taken out in April," thechief strategy officer at CoinShares said on CNBC's "Fast Money." However, she added, there "still was a lot of leverage, so this correction we've seen is healthy. A pullback is normal in crypto."

Demirors' remarks follow a particularly volatile stretch of trading in bitcoin, which is the world's largest cryptocurrency by market value.

At its low point of the day, bitcoin was down more than 30% on the session to $30,001.51, according to Coin Metrics. That represents its lowest level since late January and put bitcoin down well over 50% from its all-time high above $64,000 in mid-April.

Bitcoin recovered some of those losses Wednesday, trading above $39,500 as of 6:15 p.m. in New York. It nevertheless remained down more than 8% in the past 24 hours.

Ether, the second-largest cryptocurrency by market value, has also declined sharply in recent days after reaching an all-time high above $4,300 last week. It was down about 22% in the past day to trade around $2,600 per token Wednesday. Ether, which runs on the Ethereum blockchain, started the year priced below $800 apiece.

Demirors said she believes investors across asset classes are broadly trying to reduce risk, which is playing a prominent role in the crypto plunge. She said her firm, which has around $5 billion in assets under management, has observed a bearish trend in options activity over the past two weeks.

"I think right now we're seeing skittishness around risk in general, so allocators are pulling back. We saw this reflected in fund flows last week," added Demirors, who previously told CNBC she got into bitcoin when it was around $150 apiece.

"We saw $50 million in net outflows from bitcoin fund products last week. So, I think this is skittishness. It's tied to macro. It's tied to overall markets, tax-day selling. People just get anxious and that's what we have here," she contended.

Another factor that has appeared to influence crypto markets recently are comments from Tesla CEO Elon Musk, whose electric vehicle maker owns bitcoin. However, after his announcement last week that Tesla would stop accepting bitcoin as payment, hundreds of billions of dollars were knocked off the crypto market.

Musk sent out a tweet Wednesday that implied Tesla would not be selling its bitcoin holdings.

According to a new note from JPMorgan, institutional investors have recently been moving out of bitcoin and into gold. The firm's research is notable because adoption of bitcoin by institutional investors has been cited as one reason for the rally that began last year.

Demirors is not the only longtime bitcoin believer who is remaining confident in the face of recent selling. Bill Miller, the famed value investor and bitcoin bull, told CNBC earlier Wednesday the recent drop in bitcoin is "pretty routine."

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Crypto strategist sees pullback in bitcoin and ether as a healthy sign after massive rallies - CNBC