The price of Bitcoin (BTC) surpassed $ 34,700 to set a new record after a strong overnight rally. Ether (ETH), the native cryptocurrency of the Ethereum blockchain, also surpassed $ 800 for the first time since May 2018.
Bitcoin’s sudden rally comes as a surprise as it corrected sharply to around $ 30,300 on January 2. Within 24 hours, BTC rose from $ 30,300 to $ 34,778, a 14% rebound.
What Caused the Bitcoin and Ethereum Rally?
When Bitcoin’s price topped $ 33,000 on January 2, some whales and wealthy investors warned that a 150 BTC sell order could repeat the market.
A pseudonymous Bitcoin trader known as ‘i.am.nomad’ wrote:
“A market sale of 150 btc would reflect this whole thing. The higher the price, the more the retail sector gets the prices out, the lower the bid support. “
Within hours, pointing to the risk of a Bitcoin correction due to thin order books, BTC pulled back sharply.
However, Bitcoin recovered quickly after the initial drop, hitting a new record within 24 hours.
The main catalysts behind Bitcoin’s rally were the institutional accumulation of BTC on Coinbase and the short press on Binance Futures.
For the past three days, Bitcoin has been trading much higher on Coinbase than on other major exchanges, such as Cointelegraph reported.
This means that despite the bounty, aggressive buyers on Coinbase were continuously collecting BTC.
In the meantime, many traders on Binance Futures were short on BTC, possibly expecting Bitcoin to come in at around $ 30,000. As Coinbase buyers continued to push BTC, a short squeeze occurred. Analysts at Santiment explained:
“For those expecting a #Bitcoin correction to kick off 2021, the $ 34,000 #AllTimeHigh hit 10 minutes ago shows how painful it is to be a $ BTC bear for the past 10 months. Avg. Traders returns have not been this high across the board since June 2019. “
The ether price rebounded from Bitcoin’s strong technical momentum. The ETH / USD rallied past USD 800 for the first time since early May 2018, showing renewed momentum following a stagnation in December.
A pseudonymous cryptocurrency trader known as “Mayne” said ahead of the Ether rally on Jan. 2 that ETH is likely to go towards $ 800. He said:
“ETH thesis still on track, daily close at $ 620, we would go to $ 800. I built a big long position in December and assuming $ ETHBTC can maintain a higher low I think it will work out fine. I should have had more BTC long exposure versus ETH in December, hoping ETH would do better for January. “
What happens now?
Ethereum has another important catalyst on the horizon, as the CME futures exchange plans launch ETH futures in February.
Given the high institutional demand for Bitcoin since the first quarter of 2020, demand for Ether could also boost on listing.
Meanwhile, Bitcoin remains on an upward trajectory of price discovery, hitting new all-time highs daily. With an alleged supply shortage and a institutional shopping frenzy Now spilling over to retail, the rally may have a lot more room to run with $ 35,000 likely the next psychological level to break.
Such as Cointelegraph reportedSix-digit forecasts have become more common in recent months, especially as the rally has hit new all-time highs.