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Bitcoin price on the rise again after falling $1,000 in three days

  • Both bitcoin and Ethereum showed signs of recovery Wednesday
  • The two largest cryptocurrencies showed bearish signals after a Chinese crackdown on initial coin offerings
  • The renewed rise appeared to meet analyst expectations

Two of the largest cryptocurrencies were seen to make a recovery after dropping significantly over the past few days.

Both bitcoin and ethereum showed bearish signals following a decision by Chinese authorities to ban initial coin offerings (ICOs), which allow firms to raise funds by selling new digital tokens.

Bitcoin is now currently trading at $4,519.98, up 2.21 percent, according to Coindesk's price index; Ethereum, meanwhile, is trading at $326.87, up 4.37 percent.

The former, a highly volatile asset, fell to a low of $4,037 on Tuesday, shaving off $1,066 from its most recent all-time high of $5,103 on Saturday.

ICO crackdown

Analysts told CNBC earlier this week that they expected the downward activity on bitcoin's price to be short-lived.

China's ICO ban is not directly linked to either bitcoin or ethereum, but to future digital tokens which are offered to the market.

Some see the clampdown as an expected move, given that cryptocurrency fundraising in the country is viewed as bloated.

"The Chinese market has been perhaps the most virulently exuberant in terms of its irrational excesses and across the world regulators are looking to gradually turn up the regulatory heat on this ICO phenomenon," Charles Hayter, chief executive and founder of digital currency comparison website Crypto Compare, told CNBC in an emailed noted Tuesday.

Unlikely supporters involved in the 'crypto world'

A number of celebrities seem to be becoming active in the cryptocurrency game.

On Sunday, Paris Hilton said she would be participating in an ICO run by LydianCoin Ltd, which describes itself as the "first AI (artificial intelligence) big data marketing cloud for blockchain".

Meanwhile, British entrepreneur Michelle Mone and her partner Doug Barrowman launched the first major real estate development to be sold to the bitcoin community.

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