Cryptocurrencies staged a recovery on Monday, bouncing back from heavy selling over the weekend.

Bitcoin (BTC-USD) was up 14% to trade at $38,833 by mid-afternoon in London. Ethereum (ETH-USD), the second most popular cryptocurrency, reversed its losses to trade 24.4% higher at $2,400. Meme-inspired dogecoin (DOGE-USD) rose 12.5% to trade at $0.3312.

The market was helped by news that hedge fund billionaire Ray Dalio holds some bitcoin. The Bridgewater Associates founder said in an interview with CoinDesk that the dollar is on the "verge of devaluation on a level last seen in 1971," and that he'd "rather have a bitcoin than a bond."

Monday's rally came after a deep sell-off over the weekend. By Sunday afternoon, the global crypto market had lost 9% over the last 24-hours, according to data provider CoinMarket. Ethereum fell to around $1,750 at one point on Sunday, while bitcoin sunk as low as $31,200.

Watch: What are the risks of investing in cryptocurrency?

The slump followed a volatile week. Blockchain-based tokens suffered two price dives last week in response to talk of a crackdown in China and tweets by Tesla boss Musk.

On Friday, Chinese vice-premier Liu Hu said China would "severely crack down on illegal securities activities and severely punish illegal financial activities."

He promised to "crack down on bitcoin mining and trading" as part of China's plans to "prevent and control financial risks." China accounts for around 70% of the world's cryptocurrency mining.

Lui's comments followed statements from three state-backed organisations earlier in the week warning that digital currencies were not "real" and could face regulatory changes. The country's central bank issued a statement on its WeChat account reiterating that financial institutions should not accept or deal with cryptocurrencies.

"Cryptocurrencies remain under the cosh after a turbulent week as a crackdown on both mining and trading activity in China bites," said Neil Wilson, chief market analyst at Markets.com.

"The move is a source of concern for crypto backers and underscores the regulatory uncertainty and headwinds facing the market at a time when institutions are dialling down their bets."

Cryptocurrency had already been under pressure prior to developments in China. Telsa (TSLA) boss Elon Musk sparked a sell-off after saying his business was abandoning plans to accept bitcoin as payment due to environmental concerns.

Despite the volatility, investment bank Goldman Sachs on Friday circulated a note to its clients discussing whether crypto counted as a new asset class. While the investment bank was lukewarm on the space, the sheer fact it asked the question reflected a growing interest and acceptance of cryptos from mainstream investors.

"We’ve now hit a critical mass of institutional engagement [in crypto]," Michael Novogratz, CEO at Galaxy Digital holdings, told Goldman. "Everyone from the major banks to PayPal and Square is getting more involved, which is a loud and clear signal that crypto is now an official asset class."

Read more: Bitcoin is officially a new asset class: Goldman Sachs

Christian Mueller-Glissmann, a senior multi-asset strategist at Goldman, said it was "too soon to conclude how much value it adds to a balanced portfolio". But Mathew McDermott, the bank's global head of digital assets, said Goldman Sachs had recently re-entered the market in response to demand from clients.

"Bitcoin is now considered an investable asset," McDermott wrote. "Clients and beyond are largely treating it as a new asset class, which is notable — it’s not often that we get to witness the emergence of a new asset class."

Not everyone is convinced. Nouriel Roubini, a professor of economics at the NYU Stern School of Business and a long-time cryptocurrency sceptic, told Goldman Sachs: "Bitcoin and other cryptocurrencies have no income or utility."

Watch: What is bitcoin?