Crypto markets remained volatile and gave back some of their gains today after the U.S. Treasury Department called for stronger tax compliance within the space.

Bitcoin hovered near $39,400 as investors tried to make sense of the crash Wednesday that wiped away billions and shattered the notion of crypto as a maturing asset class. The coin retreated from intra-day highs of around $42,500 after the Treasury said the Biden administration’s proposal to strengthen tax compliance includes a requirement for transfers of at least $10,000 of cryptocurrency to be reported to the Internal Revenue Service.

Big swings have dominated crypto markets, with Bitcoin plunging and surging more than 30% within a few hours on Wednesday. The carnage kicked off last week, when Tesla Inc. billionaire Elon Musk criticized Bitcoin for wasting energy and backtracked on a decision to allow crypto transactions. Losses accelerated after China warned that digital tokens can’t be used for payments.

“It comes as no surprise that the place of Bitcoin in any investment portfolio remains highly contested, precisely because of its erratic price movements,” Alain Bokobza, head of global asset allocation at Societe Generale, wrote in a note today. “Regulation may be the biggest threat ahead for Bitcoin.”

Still, many were heartened by its recovery from Wednesday’s lows.

“You can’t keep a good dip buyer down for long in the financial markets these days, and cryptos are no different,” said Jeffrey Halley, a senior market analyst at Oanda. “The mass liquidation yesterday will have thinned out the ranks of believers.”

“It is still our best-performing allocation so far this year even after, you know, a 30% to 40% dislocation,” Troy Gayeski, co-chief investment officer at Skybridge Capital, said on Bloomberg TV. “The key is whatever size at cost you’re comfortable with, let the bull market play out, tolerate the volatility and have confidence that ultimately by the end of this year you will be at a meaningfully higher price.”

While all were proximate causes cited for the rout, the liquidation frenzy Wednesday morning was sentiment-driven and disorderly, with the coin dropping thousands of dollars in a matter of minutes. Selling gave way to more selling as investors lured into crypto in search of a quick buck bolted for the exits. It all accelerated when Bitcoin fell below its average price for the past 200 days.

The mood today in the market was quieter, with traders looking for the next technical levels and speculating whether prices have become oversold. Bitcoin pared back some of its gains to trade up 2.6% to around $39,350 as of 1:34 p.m. in New York. Ether added 7.4% to $2,724.

Halley at Oanda said Bitcoin’s round numbers will be important to watch. “$30,000.00 is the line in the sand now, and another capitulation wave will follow if it breaks,” he said, adding that if prices can hold above $40,000, then it’ll draw investors looking to get back into the action.

“This market presents opportunities for people now, but I think you will see people wait and let it settle,” said Todd Morakis, co-founder of digital-finance product and service provider JST Capital.