Bitcoin (BTC) price topped $ 34,700 and hit a new all-time high after a strong rally overnight. Ether (ETH), the native cryptocurrency of the Ethereum blockchain, also topped $ 800 for the first time since May 2018.
Bitcoin’s sudden rally is surprising as it was corrected sharply to around $ 30,300 on Jan. 2. In 24 hours, BTC rose from $ 30,300 to $ 34,778, a 14% recovery.
BTC / USD Hour Candle Chart (Bitstamp)
What triggered the Bitcoin and Ethereum rally?
When the price of Bitcoin topped $ 33,000 on Jan. 2, some whales and high net worth investors warned that a sell order of 150 BTC could backtrack the market.
A pseudonymous Bitcoin trader named “i.am.nomad” wrote:
“A market sale of 150 BTC would understand this whole thing. The higher the price, the more retail prices are obtained, the lower the bid support. “
Within a few hours, he recognized the risk of a Bitcoin correction due to thin order books, and BTC withdrew sharply.
However, Bitcoin quickly rebounded after the initial decline and hit a new record high within 24 hours.
The main catalysts behind Bitcoin’s rally were the institutional build-up of BTC on Coinbase and brief pressures on Binance Futures.
For the past three days, Bitcoin has been trading much higher on Coinbase than other major exchanges, as Cointelegraph reported.
This means that aggressive buyers on Coinbase continued to accumulate BTC despite the premium.
Bitcoin tops $ 34,000 with average merchant returns hitting highs. Source: Santiment
In the meantime, many Binance Futures traders have trimmed BTC, possibly expecting Bitcoin to hit a high of around $ 30,000. As the buyers of Coinbase BTC pushed further up, there was brief pressure. Santiment analysts stated:
“For those expecting a #bitcoin correction to begin in 2021, the #AllTimeHigh of $ 34,000 10 minutes ago shows how painful it has been to be a BTC bear for the past 10 months. Average Dealer returns have not been this high since June 2019. “
Ether price rebounded due to Bitcoin’s strong technical momentum. For the first time since the beginning of May 2018, ETH / USD rose above USD 800 and, after stagnating in December, showed another dynamic.
A pseudonymous cryptocurrency trader called “Mayne” said on Jan. 2 ahead of the Ether rally that ETH is expected to be heading for $ 800. He said:
“The ETH thesis is still on track; every day we close up to $ 620 to $ 800. I took a large long position in December and I expect $ ETHBTC to hold a higher low. I think it will be fine. I should have had more long-term BTC exposure to ETH in December in the hope that ETH would outperform in January. “
What happens next?
Ethereum has another major catalyst on the horizon as the CME futures exchange plans to launch ETH futures in February.
Given the high institutional demand for Bitcoin since the first quarter of 2020, demand could also boost Ether in its listing.
Google searches for “Bitcoin”. Source: Google Trends
Meanwhile, Bitcoin is still on an upward trend in pricing, making new record highs every day. Given an alleged supply shortage and institutional buying frenzy now spilling over into retail, the rally could have a lot more wiggle room, with $ 35,000 likely to be the next psychological level to break.
As Cointelegraph reported, six-digit predictions have become increasingly common in recent months, especially as the rally hit new all-time highs.