Cryptocurrency prices have recovered significantly after the meltdown on Wednesday when nearly $1 trillion was wiped off the market cap of the entire crypto sector. However, cryptocurrencies are still under pressure.

Bitcoin, the largest digital currency by market cap, plunged by 30 percent in a day loss to nearly $30,000 at one point on Wednesday. It went up to around $40,000 at 2 p.m. Beijing Time on Thursday but was still 40 percent below the record high $64,829 seen in mid-April.

Ether, the second-largest digital currency after Bitcoin, fell as much as 45 percent to hit an intraday low of about $1,900 on Wednesday. It is now recovering and traded at around $2,650 at 2 p.m. on Thursday.

Amid Wednesday's crypto sell-off, Tesla CEO Elon Musk tweeted a "diamond hands" emoji, used in social media to signal a position is worth holding on to.

His tweet helped the recovery of cryptocurrency prices, Mike Venuto, founder and chief investment officer at Toroso Investments, which oversees $7 billion in assets, told Reuters.

"Would it have recovered some without it? Yes. But would it have recovered nicely? Maybe not."

However, over 830,000 traders' accounts have been liquidated over the past 24 hours, Bybt.com data showed. Spooked investors may continue to offload their holdings, which would continue to impose pressure on cryptocurrencies.

Over $250 billion evaporated from the bitcoin market alone last week. Negative news over the past week has undermined their potential as mainstream investments.

Musk said on May 12 that Tesla had suspended payment for its cars in cryptocurrency, citing energy consumption in bitcoin mining as a concern. Over $300 billion was wiped off the entire cryptocurrency market that day, partly thanks to the CEO's comments.

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Chinese regulatory authorities on Tuesday banned financial and payment institutions from providing services related to virtual currency transactions and warned investors against speculative trading.

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Many analysts thought the explosion in crypto interest this year was not sustainable. Some crypto-watchers predicted more losses ahead, noting bitcoin's fall below $40,000 represented a breach of a key technical barrier.

(With input from Reuters)