Cryptocurrency markets have seen a huge resurgence, causing the price of bitcoin to shoot up by more than 20 per cent in less than 24 hours.

The gains follow one of the worst crashes in the digital currency’s history, which saw it lose more than half of its value in a series of panicked sell-offs last week. The crash mirrored the fortunes of traditional markets and came amid global economic turmoil caused by the Covid-19 coronavirus pandemic.

Bitcoin’s recovery saw it return above $6,000 on Thursday, having briefly traded as low as $4,000 a few days earlier. Other major cryptocurrencies, including ether, XRP and bitcoin cash, also saw significant price rises as investors returned capital into digital assets.

“Bitcoin’s crash was a knock-on effect of the stock market collapse, as panicked investors sold any assets they had for cash, so they could pay off urgent debts to their broker,” cryptocurrency expert and author Glen Goodman told The Independent.

The coronavirus outbreak, which has seen more than 230,000 confirmed cases and close to 10,000 deaths around the world, has caused chaos across global stock markets and seen major currencies like the pound fall to their lowest levels in decades.

Loading....

There has not been an economic downturn of this magnitude since the 2008 financial crisis and some central banks are already considering similarly drastic measures in order to prevent complete collapse.

The Reserve Bank of Australia and the European Central Bank are reportedly considering emergency monetary policies, including quantitative easing. This would see the banks artificially increase the money supply by essentially printing new money.

The finite supply of bitcoin – no more than 21 million will ever exist – has led some investors to consider it a so-called safe-haven asset, similar to gold.

“For the longer term, investors are now starting to worry about central banks cranking up the money printing machines,” Mr Goodman said. ”This could send investors to assets that can’t be endlessly printed, like gold and bitcoin.”

Bitcoin's volatile history in pictures Show all 8 1 /8 Bitcoin's volatile history in pictures Bitcoin's volatile history in pictures Satoshi Nakamoto creates the first bitcoin block in 2009 On 3 January, 2009, the genesis block of bitcoin appeared. It came less than a year after the pseudonymous creator Satoshi Nakamoto detailed the cryptocurrency in a paper titled 'Bitcoin: A peer-to-Peer Electronic Cash System' Reuters Bitcoin's volatile history in pictures Bitcoin is used as a currency for the first time On 22 May, 2010, the first ever real-world bitcoin transaction took place. Lazlo Hanyecz bought two pizzas for 10,000 bitcoins – the equivalent of $90 million at today's prices Lazlo Hanyecz Bitcoin's volatile history in pictures Silk Road opens for business Bitcoin soon gained notoriety for its use on the dark web. The Silk Road marketplace, established in 2011, was the first of hundreds of sites to offer illegal drugs and services in exchange for bitcoin Bitcoin's volatile history in pictures The first bitcoin ATM appears On 29 October, 2013, the first ever bitcoin ATM was installed in a coffee shop in Vancouver, Canada. The machine allowed people to exchange bitcoins for cash REUTERS/Dimitris Michalakis Bitcoin's volatile history in pictures The fall of MtGox The world's biggest bitcoin exchange, MtGox, filed for bankruptcy in February 2014 after losing almost 750,000 of its customers bitcoins. At the time, this was around 7 per cent of all bitcoins and the market inevitably crashed Getty Images Bitcoin's volatile history in pictures Would the real Satoshi Nakamoto please stand up In 2015, Australian police raided the home of Craig Wright after the entrepreneur claimed he was Satoshi Nakamoto. He later rescinded the claim Getty Images Bitcoin's volatile history in pictures Bitcoin's big split On 1 August, 2017, an unresolvable dispute within the bitcoin community saw the network split. The fork of bitcoin's underlying blockchain technology spawned a new cryptocurrency: Bitcoin cash REUTERS Bitcoin's volatile history in pictures Bitcoin's price sky rockets Towards the end of 2017, the price of bitcoin surged to almost $20,000. This represented a 1,300 per cent increase from its price at the start of the year Reuters

Other analysts warned that the full impact the coronavirus outbreak is yet to be realised for both tradition markets and cryptocurrencies.

“It is possible we could see bitcoin fall further, back down to $4,000 or below. If the impact of the coronavirus outbreak intensifies beyond the global lockdown we are already experiencing, it could spark a further run for cash,” said Simon Peters, a market analyst at the online trading platform eToro.